Govt Contracts: Your questions answered

Advice: How not to get sued

Finance: Manage your cashflow

Winter 2008 Volume 2: Number 5

SCS REVIEW

Everybody’s talkin’ at me

Merger Consolidation Reco

CashflowMargin Good gri

sis Sta

President’s news

Welcome to the Christmas Winter edition of the SCS Review.

Since the last edition of the Review was published, the SCS Annual

Conference has taken place and I was delighted to see so many members in

attendance. I was also pleased to see the level of media interest surrounding

the event. Reports of the conference were included in all of the national

written press and it was also featured in the TV3 News that evening. My

sincere thanks to all on the committee and our speakers for their hard work in

ensuring the success of the 9th SCS Annual Conference.

In attending events throughout the country in my capacity as President of

the Society, the question of the economic outlook for Ireland frequently

arises and the opinions of our profession are sought. Many of our political

commentators have agreed that the two big drivers of growth, consumer

spending and construction, will weaken further in the short term. Our

unemployment rate is set to rise to 8% and 9% during 2009 and 2010;

however, the ESRI has predicted that Gross National Product will increase

from an anticipated -0.7% in 2009 to 3.9% during 2010.

In its pre-budget submission to the Government, the Society called upon the

Minister for Finance, Brian Lenihan, to take advantage of the fall in

construction tender prices to the benefit of the Exchequer by actually

increasing NDP activity instead of decreasing it. The SCS acknowledges the

announcement that gross capital spending will be approximately 5% of

projected Gross National Product in 2009, which equates to €8.2bn and its

commitment to, at a minimum, maintain this rate of investment in 2010 and

2011. However, many of us working in the sector have felt the unwelcome

impact of an informal policy emanating from government departments where

the delivery of major construction projects has been ‘paused’, or it is taking a

longer period for projects to get up and running and for contractors to get

paid. This in turn has a severe negative impact in all areas of the construction

and property industry and the wider economy. John Minihane’s article in this

edition in relation to prompt payments is of interest in this regard.

The effect on those of us employed in the construction and property industry

has also taken its toll, with redundancies now commonplace across our sector.

The Society Council has decided to take the initiative and implement

supportive action by providing a facility for those members who face difficult

times ahead to retain their membership of the Society at a nominal rate over

the next 12 months – details of this measure will be announced in the notice

of membership subscription renewals. We are also seeking to establish some

practical support measures for those members in the form of ‘career

transition’ training and support details of this programme will also be made

available shortly. Members should also be aware of the availability of the

Lionheart benevolent fund to all members in Ireland, details of which are also

enclosed.

So what of the economic outlook and the opinions of our profession in this

regard? It is now apparent that 2009 will be very challenging for all of us and

the outlook for 2010 may be similar. However, with strong political leadership

from our Government, an easing of the ‘credit squeeze’ and control on

inflation levels, we as a profession, based on these positive assumptions, can

look forward to rebuilding confidence in the market during 2010.

Sean McCormack ASCS, MRICS, ACI, Arb.

President, Society of Chartered Surveyors

2 SCSREVIEW

NEW CLASSIFIED SECTION…new initiative see page 31

Contents

The Society of Chartered Surveyors,

5 Wilton Place,

Dublin 2.

Tel: 01-676 5500

Fax: 01-676 1412

Email: info@scs.ie

Web: www.scs.ie

EDITORIAL BOARD

Chairman: John Oliver Costello

Board: Tom Cullen

John Minihane

Ciara Murphy

Paul O’Grady

Gillian Reynolds

Derry Scully

PUBLISHERS

Published on behalf of SCS

by Think Media Ltd

Editorial: Ann-Marie Hardiman

Paul O’Grady

Design: Tony Byrne

Tom Cullen

Ruth O’Sullivan

Advertising: Pat Murray

www.scs.ie

Views expressed by contributors or correspondents are not necessarily those of the Society of Chartered Surveyors or the publisher and neither the Society of Chartered Surveyors nor the publisher accept any responsibility for them.

30

Time is of the essence.

04 Editorial Coping with difficulty

04 Submission on Arbitration Bill, Past Presidents’ Dinner, and

News more

10 Brendan Merry and Obituaries Peter Flanagan

11 The 75th Young Chartered YCS�Ball Surveyors Black Tie Ball

12 Finding the silver lining – the Annual Conference SCS Annual Conference

14 Euro news Nous sommes des Européens

16 Redundancy Can we have a word ...

18 Repairs

Dilapidations and the burden of repair

20 Management How not to get sued

22 Rural practice

If you go down to the woods today

24 Finance

Much obliged! Time to join forces Managing your cashflow

27 Legal matters Case law review

28 Government contracts GCCC documents Q&A

30 Insurance Time is of the essence

SCSREVIEW 3

News

Editorial

Coping with difficulty If there is a theme running throughout this packed edition of the SCS

Review, it is assistance in coping with the difficulties we all currently face.

Cashflow has to be minded carefully and prompt payment to us and by us is

even more important than normal. All options have to be considered and in

this edition, there is information on coping with redundancy and upskilling;

looking at the route of mergers and acquisitions; ensuring that we avoid

getting sued; and, a hugely helpful question and answer article on the new

Government contracts.

Thankfully, most of the experts at our recent Annual Conference were of the

view that if we can weather the current economic storm, the medium-term

outlook for Ireland is quite good.

Our publication is designed to assist all members to weather the storm and

we hope you find it helpful.

Wishing you a happy Christmas and a peaceful and prosperous 2009.

John Oliver Costello

Honorary Editor

Submission on Arbitration Bill The Arbitration Bill 2008, which was published in June of this year by the

Department of Justice, is a Bill to further and better facilitate resolution of

disputes by arbitration and to give the force of law to the UNCITRAL

Model Law on International Commercial Arbitration. The Bill, if passed, will

repeal the three Acts governing this area that are in force at the moment:

the Arbitration Act 1954; the Arbitration Act 1980; and, the Arbitration

(International Commercial) Act 1998.

The popularity of arbitration as a method of resolving commercial disputes

has grown substantially over the past number of years and its use is well

established within the construction and property sectors. Many Chartered

Surveyors in Ireland practising in construction, property or building

surveying are actively involved in arbitration and other forms of dispute

resolution relating to:

n rent reviews;

n construction projects, both public and private; and,

n disputes arising under commercial leases and under other landlord and

tenant relationships.

As such, the Society established a working group to consider the contents

of the Bill and make a submission to the Department of Justice.

In its submission, the SCS has welcomed the proposals to consolidate and

modernise the law relating to Irish domestic arbitration. By virtue of its

language and the manner in which it is drafted, the SCS is of the view that

the UNCITRAL Model Law is straightforward, easily readable, readily

understood, and its provisions are consistent with good arbitration

practice. It is also noted that the UNCITRAL Model Law is a widely

accepted framework for the regulation of arbitration.

The Society has urged the Department to ensure that, in integrating the

Model Law into Irish law, the changes will improve the arbitral process and

not make the process slower, more complex or cumbersome, or more costly

for the parties involved.

The Society has also submitted a detailed comment on the Bill, a copy of

which is available for perusal on the SCS website – www.scs.ie

4 SCSREVIEW

News

The annual Past Presidents’ Dinner

of the Society of Chartered

Surveyors took place in Wilton Place

on Thursday, November 13, 2008.

Some 30 past Presidents attended

the gathering, which was hosted by

current SCS President, Sean

McCormack. Addressing the past

Presidents, Sean McCormack spoke

of how honoured he was to be

among such esteemed members,

and acknowledged their

contribution to the Society over the

years.

Also in attendance at the event

1. Larry Martin 2. John Daly 3. Tony Smith

10. Sean McCormack 11. Tom Dunne 12. Brendan O’Meara

were Ken Cribbin, SCS Senior Vice 4. Jim Dent 13. Joe Bannon President, Ciara Murphy, Director 5. Derry Scully 14. Harry Whittaker

General, Zöe O’Connor, Education 6. Brendan Sheridan 15. Conor Hogan

Officer, and Tony Smith, Registrar,

SCS Registration Body.

7. Bill Nowlan 8. Tom D’Arcy 9. Barry Smyth

16. Pat Duffy 17. David Kelly 18. Felix McKenna

1 2 4 6 7 11 18 3

5 8

9 10 12 13

14 15 16

17 19

20 21 22

23 24 25 26

27

SCS Past Presidents’ Dinner

19. Fred Devlin 20. John Bruder 21. Padraig Mulcahy 22. Kevin Callan 23. Noel McDonagh 24. Ciara Murphy 25. Des Byrne 26. Anthony Leonard 27. John Costello

SCSREVIEW 5

News

Lionheart swing into action BARRY�SMYTH reports on the golf outing which raises funds for the industry’s benevolent society.

The 22nd annual golf outing of the

Society of Chartered Surveyors in

aid of Lionheart, the RICS

Benevolent Fund, was held yet

again at Woodbrook Golf Club by

kind permission of the Captain and

Committee on Friday June 13, 2008.

A golf outing was originally

identified by the Benevolent Fund

committee as a way to raise money

for the Benevolent Fund in addition

to the usual contributions from

subscriptions and annual dinner

tickets. Over the years the event has

raised considerable funds for

Lionheart, putting the Society

almost invariably at the top of the

list of contributors on a per capita

basis.

Records are nonexistent and

memory weak, but recollection is

that the founding fathers of this

event included, among others, David

Kelly, Stuart Harrington, Sean

McDermott and Henry Tierney

(apologies to anyone whose name

has been omitted).

This year’s event was held in blazing

sunshine (could that be true in

2008?) and 36 teams of three took

part. Traditionally there has been a

dinner at the end of the event, but

drink driving considerations now

mean that a meal is available to

participants as they complete their

rounds, with a smaller number now

attending the later dinner.

The major prize for the individual

winner, keenly sought after in the

golfing world, has always been a

large watercolour of Dublin or

Wicklow landscapes by Brid Clarke,

wife of member Pat Clarke, and Brid

yet again provided us with the prize

this year. Last year, as the outing

was on Bloomsday, Brid provided a

fascinating painting of Molly Bloom

clearly in the middle of her

soliloquy.

The outing is organised by a

stalwart committee whipped into

line by Paddy O’Donohoe and

otherwise comprising Edward Lyons,

Eoin Mc Dermott, Brendan Merry

(RIP), Barry Smyth and Derek Jolly.

A constant entrant and serious

competitor in this competition over

the years was the late Joe Bardon

and it is with much sadness that we

note his passing earlier this year. As

everyone must be aware, we also

lost a most valued committee

member and hard working organiser

of the event in recent weeks after a

short illness, Brendan Merry. May

they both rest in peace.

Among the major prize winners this

year were Ron Buckley, who won

the individual prize, and Philip

Chambers, winner of the first team

prize, who in the previous year

scored a hole in one.

€12,500 was raised, and this

donation has been gratefully

acknowledged by Lionheart with a

formal document displayed in the

hall in Wilton Place.

Over the past 22 years there have

President Sean McCormack presenting the winning team prize to Philip Chambers.

been good times and bad in our

industry but the golf outing has

always been terrifically supported

and we hope this will continue to be

the case. It is regarded as a very

good event on a wonderful course

with a good social atmosphere

afterwards. We would love to see

some of the younger members

taking part rather than assuming

that this is an event only for senior

members. The 2009 event will be on

Friday June 12, again at

Woodbrook, so put this date in your

diary now and treat it as a priority in

your charitable donations for 2009.

Lionheart From time to time, members may find themselves

falling on hard times and Lionheart is a facility available to all members of

the Society should the need arise. Further enquiries can be made in

confidence to Barry Smyth, Lionheart Steward, Tel: 01 676 8300.

The SCS Southern Region Annual

Dinner took place on Friday,

November 7, 2008 in the

Maryborough House Hotel. Over 250

members attended the popular

event, which was hosted by

Southern Region Chairman, Michael

Barrett. Guest speaker Bill O’Herlihy

gave a light-hearted and

entertaining after dinner speech.

PHOTO�LEFT From left: Bill O’Herlihy, guest speaker; Sean McCormack, SCS President; Ciara Murphy, SCS Director General; Deputy Lord Mayor, Cllr Laura McGonigle; and, Michael Barrett, Southern Region Chair.

PHOTO�RIGHT From left: Committee members Brian O’Driscoll, John Lyden, Brian Edwards,

and Tim O’Sullivan.

Southern Region Annual Dinner

6 SCSREVIEW

News

Michael Long Memorial Lecture

The Long family.

The Geomatics Division of the

Society hosted an evening memorial

lecture and social event on October

16 in the Society offices in Wilton

Place in honour of their first

Chairperson, Michael Long (RIP).

Michael, a longstanding member of

the Society and the first land

surveying professional to join the

SCS, was warmly regarded by his

fellow Society Officers, who

recognised his professionalism and

commitment to the Society.

Through his foresight, determination

and hard work, the Geomatics

Division developed from its

inception as a special interest

group to its current status as a

fully fledged and highly active

Division.

In the initial stages of his career,

Michael was a very well travelled

surveyor, spending time practising

and advising surveyors abroad,

particularly in Africa. On returning

to Ireland he spent the majority of

his remaining career in the

Property Registration Authority

(PRA; formerly known as the Land

Registry) and was a font of

knowledge in all matters relating to

boundary surveying and land

registry mapping in Ireland.

Although rising to a very senior

level in the PRA, he was always

approachable and available to

assist younger surveyors and to

guide them on their way to

becoming chartered.

The memorial event, chaired by

Society President Sean

McCormack, was attended by

Michael’s widow Ita and his adult

children, who had an opportunity

to view the Geomatics Chain of

Office, which is dedicated to

Michael’s memory – his name

being inscribed on it. A select

number of invited guests from the

Society, industry, the PRA and

academia also attended the

evening lecture, which focused on

the surveyor’s role in society.

Professor Stig Enemark, President

of the International Association of

Surveyors (FIG), was the principal

speaker and provided a very

entertaining talk on where the

focus of the surveying profession

should lie in a global context.

Other speakers included Tony

Smith, a long time personal and

professional friend of Michael’s,

and Diarmuid Clancy, Deputy

Registrar of the Property

Registration Authority, Michael’s

former employer. It was a

wonderful event and one which

was truly a fitting tribute to

Michael’s memory.

From left: Stig Enemark, President, FIG; Audrey Martin, Chairman, Geomatics Division; and, Sean McCormack, President, Society of Chartered Surveyors.

SCSREVIEW 7

News

Sisk contract win John Sisk & Son has been awarded

the contract for the re-development

of the PJ Carroll Building at

Dundalk Intitute of Technology. The

contract, which commenced in

October, involves a re-roof of the

entire building, remedial works to

the listed external calcium silicate

brickwork and curtain walling, and a

complete fit out.

Dundalk Institute of Technology

acquired the PJ Carroll Cigarette

Factory adjacent to the campus in

2002 for €16 million. The property

consists of 17,780m2 of office and

factory space sitting on 18 hectares.

The factory itself, designed by

Ronnie Tallon of Scott Tallon Walker

in the late 1960s, is a listed

property of national and

international significance.

The refurbishment programme will

create new state of the art

teaching, laboratory and staff areas.

It will involve the refurbishment of

over 11,000m2 of space within the

factory area and will be completed

by the end of 2009.

The heavily serviced internal fit out

includes recording studios, tiered

lecture theatres, sonic and IT labs,

offices, dance rehearsal studios and

open communal areas. The contract

is valued at €17.9m.

The refurbished scheme has been

designed by the original architects,

Scott Tallon Walker, and includes

many innovative architectural and

special purpose design features.

These include a substantial

emphasis on the use of renewable

energy systems with, for example,

the Institute’s wind turbine being

used to create ice banks at off-peak

times to reduce reliance on grid

supplied electrical energy for air

conditioning. The development is

an important element in the

Dundalk 2020 Renewable Energy

Initiative being spearheaded by

Sustainable Energy Ireland with the

campus and adjacent areas being at

the centre of a new Renewable

Energy Zone.

The new tourism and leisure building at Waterford Institute of Technology.

Providing sustainable buildings WIT

Healy Kelly Turner & Townsend has

been providing cost advice to

Waterford Institute of Technology

(WIT) for the construction of the

new €21m tourism and leisure

building, which is the largest single

capital project the Institute has

undertaken.

Sustainability was a key factor in the

design, which has been implemented

to exacting standards in order to

achieve airtightness figures that will

have a significant effect on the

building’s energy performance.

Mark Kelly, Managing Director of

Healy Kelly Turner & Townsend,

commented: “We are delighted to

have played a key role in the

successful completion of the

tourism and leisure building, which

will reinforce WIT’s standing as one

of Ireland’s leading third-level

education providers”.

IPS HQ

Meanwhile, another Healy Kelly Turner & Townsend project, the new €18.5m

Irish Prison Service HQ Building in Longford has been officially opened, having been completed on time and within budget.

The fit out of the building was to an

extremely high specification,

providing facilities such as a

cafeteria and gymnasium, in

addition to extensive office space.

The cost drivers for several different

proposals were examined to help

choose the most economical

proposal over the complete life cycle

of the building, and these

alternative proposals were also

modelled using state-of-the-art

environmental modelling tools.

Healy Kelly Turner & Townsend is a

construction and management

consultancy with offices in Dublin,

Waterford and Belfast.

The new Irish Prison Service Headquarters Building in Longford. (Photographs: Andy Mason.)

8 SCSREVIEW

News

Appointments at Colliers Jackson-Stops

The Board of Directors at Colliers

Jackson-Stops is delighted to

announce a number of new

appointments at the firm.

Shane Cahir MRICS ASCS (right)

has been appointed Associate

Director – Retail. A qualified

Chartered Surveyor, Shane has been

with the company for three years.

Part of the Colliers retail set-up,

Shane currently advises retailers

such as Tempest, Menarys, River

Island and Barratts, as well as

developers such as North Quay

Developments (Bridgewater Centre)

and Walls Properties.

Paul Finucane MRICS ASCS (centre)

has been appointed Associate

Director – Commercial. Previously

with AIB Property, Paul is also a

qualified Chartered Surveyor, and

has been with the firm for four

years. He specialises in industrial

and commercial lettings, acting for

clients such as Rohan Holdings,

Bosch Siemens and Albion

Properties.

Finally, part of the Colliers team for

some six years, Caroline Ashcroft

(left) has been appointed Associate

Director and Office Manager for the

company. Caroline’s broadranging

role as office manager encompass

HR, marketing, and the smooth and

efficient day-to-day running of the

office.

Colliers Jackson-Stops is one of

Ireland’s leading property

consultancies, advising on all ranges

of commercial, investment and retail

properties, as well as having a

significant residential and country

property division. Additionally, it is

a member of Colliers International,

providing an ability to serve clients’

property needs in over 260 offices

throughout 55 countries.

Davis Langdon PKS

Davis Langdon PKS is pleased to confirm the following promotions and additions to further strengthen their management team. From left: Stuart Griffin, Associate; Tomás Kelly, Regional Director; John Quinlan, Associate; Norman Craig, Managing Director; Dominic Kearney, Associate; Anthony McDermott, Associate; and, Michael O’Driscoll, Associate.

European operations

Bruce Shaw has announced the

appointment of Ciarán Chesser

MBA FSCS FRICS FCI.Arb MAPM

as General Manager of European

Operations. Based in the

Bucharest office, he will be

responsible for projects in the

CEE region. Ciaran has previously

been partner/director in two

respected international

consultancies and joins us with

strong cost and project

management experience, starting

from a contractor background.

Projects have varied from leading

edge ‘green’ building through

Hong Kong Airport, New Town

Development, offshore and much

more. Current projects include:

Park Lake Plaza Retail

Development, Bucharest;

Basarbia Residential

Development, Bucharest; and,

various speculative developments

in Poland, Ukraine and Russia.

Bruce Shaw Project Consultants

Srl. delivers cost and project

management services for

developments in the CEE region.

Combining the extensive

resources of Bruce Shaw with the

local market knowledge and

experience of Bruce Shaw project

consultants, we provide a variety

of value-added construction

consultancy services throughout

Europe.

SCSREVIEW 9

Obituaries

Brendan Merry The quantity surveying

profession and the construction

industry lost a great colleague

with the recent death of

Brendan Merry. Brendan, was

brought up in Glasnevin. His

secondary education was at

Belvedere College and he

retained contact with the

College and his school friends

throughout his life.

Brendan studied quantity

surveying through the College

of Estate Management passing

the professional examinations of the Royal Institution of Chartered Surveyors

to become a Chartered Quantity Surveyor in 1962.

It was in Aidan Whelan & Associates that Brendan started his career in the

early 1960s. Eight years later he founded Brendan F. Merry & Associates,

which went from strength to strength and provided quantity surveying services

on landmark construction projects in both the public and private sectors.

Under his direction, the practice developed and became Brendan Merry &

Partners, bringing a continued commitment to providing excellent service to

clients, which was and still is the ethos of the practice.

Brendan’s dedication to detail, his calm manner, great humour and infectious

laugh are well known and stood to him in many tricky situations. He was held

in the highest regard by the many clients, architects, engineers, surveyors and

contractors he worked with. He was also a great listener and gave sound

advice to those who sought it.

He gave generously of his time to the Society of Chartered Surveyors. He was

Chairman of the QS Division in 1976 and 1977 and Chairman/President of

the Society in 1981. During his tenure he participated in the negotiations

with the RICS resulting in the Society of Chartered Surveyors coming into

existence as an independent body.

Brendan also represented the Society in the construction industry and was a

past Chairman of the Construction Industry Liaison Committee.

Brendan had a great interest in all sports and the depth of his knowledge was

awesome. His great passion was rugby and he had a life long association with

Old Belvedere, of which he was a past President and Trustee. He was a

familiar figure at home and away fixtures and at functions.

He was also a keen golfer and a member of Woodbrook Golf Club. Brendan

also enjoyed the Surveyors Golfing Society outings. Brendan was a devoted

family man who, together with his wife Evelyn, raised a wonderful family in

Helen, Suzanne and Niall.

Brendan developed idiopathic pulmonary fibrosis in early 2007 and required a

lung transplant. Brendan put all his energies and determination into getting

onto the lung transplant list. With the support of his family, they campaigned

for the organ donor scheme to be reversed so that it is assumed that

everybody wants to donate their organs unless they specify otherwise.

Brendan had his hopes of a lung transplant dashed on three occasions.

The best tribute that can be paid to this exceptional person is to support the

introduction of legislation so the opt out organ donor scheme can be brought

in and to support funding events organised by the Irish Lung Fibrosis

Association.

He will be greatly missed by his family, his brothers and their families, his

work colleagues, his professional colleagues and many friends.

May he rest in peace.

Peter Flanagan It is with great sadness that we remember our friend and colleague Peter

Flanagan who died suddenly in his home on September 13.

Peter, a native of Liverpool of Irish extraction, started his quantity surveying

career the old fashioned way. He joined a QS practice straight from secondary

school and qualified as a Chartered Surveyor via the RICS direct membership

exams. He came to Ireland in his early twenties and worked in Galway with

Patrick Butler & Associates. It was during his time that he met his wife Peggy,

then a medical student in the National University of Ireland, Galway.

Following Peggy’s graduation, they married and moved to Dublin. Peter

worked on both the client and subcontractor sides of the industry, and was

employed by Mulcahy McDonagh, Cape Insulation and Murray & O’Brien

before joining Bruce Shaw Partnership in 1989. In 1991 he moved to

Yorkshire and worked as QA Manager for a local authority. On his return to

Dublin in 1997, he rejoined Bruce Shaw assuming the role of QA & Training

Manager, a job that he was particularly suited to.

Peter had an in-depth technical knowledge of measurement, contract law

administration and claims and disputes. This knowledge, combined with his

ability to communicate with young people, made him a wonderful Training

Manager. Working closely with the SCS, Peter mentored countless Bruce

Shaw surveyors through their professional competency exams and they are

forever indebted to him for his guidance and support. In addition to training,

Peter also managed Bruce Shaw’s quality assurance system and this too was a

role at which he excelled.

Peter was a man with many

interests; an avid Everton Football

Club supporter, he was also a keen

mountaineer and experienced

alpinist. As a hill walker he had a

particular fondness for Connemara

and The Lake District. He was a

great conversationalist with a

passionate interest in Irish and

world affairs and had an

encyclopedic knowledge of the

history of these islands.

Peter was also a loving husband

and father. Following his wife’s

diagnosis with multiple sclerosis a

number of years ago, he, with the

support of his family and friends,

cared for her in their home in

Ballymore Eustace, County Kildare until his untimely death on September 13.

He is also survived by his two sons Seamus and Oisin.

Peter is very sadly missed by his friends and colleagues in Bruce Shaw and all

those who knew him within the industry.

May he rest in peace.

10 SCSREVIEW

SCS�event

Head table guests Lisa Corcoran and Katy Norton of Jones Lang LaSalle.

FRONT ROW (from left): Collette Nugent; Sarah Stapleton; and, Jessica Ramsey. BACK ROW: Andrew Nugent; Peter Stapleton; Kieran Curtin, Vice Chairman, YCS; Andrew Ramsey, Chairman, YCS; Gavin Moran; and, Ciaran Johnston.

At the Ball The 75th Young Chartered Surveyors (YCS) Black Tie Ball took place in October at the Alexander Hotel, Dublin.

There was a fantastic turnout with over 300 people taking the time out to networking and large amounts of enjoyment and fun. While there was talk of

attend. These included our very special guests, Junior Vice President of the the recession and the recent demise of the Celtic Tiger, it most certainly didn’t

Society of Chartered Surveyors, Peter Stapleton and his wife Sarah, and Andrew dampen any spirits.

Nugent and his wife Colette. This year we were also jointed by Gavin Morgan, During and after the dinner there were a number of prizes up for grabs. These

Chairman of Matrix Northern Ireland. included a virtual golf lesson, a tomtom sat-nav and a number of iPods. There

Andrew Ramsey spoke about the importance of becoming a Chartered was a large jar of sweets and people arriving were asked to guess the quantity.

Surveyor. Peter Stapleton advised on the important role the Society is playing As with all great nights, a lot of organisation was involved, so a very special

in lobbying the Government on a number of issues. thanks has to be given to the YCS Social Committee without whose efforts the

The ethos of the night is small amounts of business, medium amounts of night would not have happened.

Katrina Kopecma, Sarah Jane Kiernan, Jackie Kidney and Lisa-Marie Hogan of Irish Estates.

Young Chartered Surveyors Social Committee From left: Emma Dakin; Andrew Ramsey; Yvonne Kieran; and, Kieran Curtin.

SCSREVIEW 11

SCS�event

Finding the silver lining This year’s Annual Conference was a packed affair in It was Professor John FitzGerald of the ESRI who probably expressed the key every sense, with professionals from every sector of thought of the day at this year’s SCS Annual Conference – can we find a

the industry keen to hear expert views on the future. silver lining in this recession? In fact, several speakers including FitzGerald,

identified that while it will be late 2009, or more probably 2010, before we Here’s a pictorial record of the event.

The main sponsors of the Conference, with SCS�President Sean McCormack, were Paula Hodson, Travelers and Joe Grogan, Marsh.

Tony Cullen, Thorntons Chartered Surveyors and Derry Scully, Bruce Shaw Partnership

Pat McGovern, Pat McGovern and Associates; Peter Stapleton, Lisney and Andrew Nugent, Andrew Nugent and Associates.

12 SCSREVIEW

SCS�event

The O’Reilly Hall provided the perfect venue for the Annual�Conference, with an ideal lobby for delegates to socialise and discuss topics of mutual interest.

see the earliest signs of recovery, the medium-term outlook for the Irish

economy is quite good.

Tom Costello of John Sisk and Son Ltd stated that the construction industry

had hit a peak of €36 billion worth of work in 2007, but a level of €20 billion

is sustainable in the long run. This compares with a level of €8 billion in 1994.

All of the speakers: the above plus Pat Walsh of Anglo Irish Bank; Professor

Stig Enemark, President of FIG; John Bruder of Treasury Holdings; and, David

Strahan, journalist and author, presented the difficulties and challenges that

face the economy in general and the commercial property industry

specifically without pulling any punches. David Strahan left the audience with

the thought that if we don’t change, consumption will consume us!

The day was well-attended and packed with useful insights.

SCS President, Sean McCormack, with speakers Professor John Fitzgerald, ESRI and Tom Costello, John Sisk and Son Ltd.

Ciara Murphy, Director General with speaker David Strahan.

SCSREVIEW 13

Euro news

Nous sommes des Européens The SCS is affiliated to three European representative bodies and co-operates on matters of mutual interest to building and construction professionals.

European estate agents representation

Established in 1990, the Conseil Europeen des Professions

Immobilieres (CEPI) is an international non-profit making

association which has its headquarters in Brussels. It

represents more than 200,000 estate agents and property

managers across Europe. The SCS GP/Valuation Division

appoints two representatives to represent the views of the SCS in CEPI.

CEPI’s mission is to support European and cross-border property transactions

by developing the work and activities of real estate professionals with the

interests of the consumer in mind. Its main objectives are:

n to become the favoured reference and the rallying point for European

property professionals;

n to strengthen working relationships between professionals;

n to oversee the professional ethics of estate agents and property managers

and the quality of their education; and,

n to improve market knowledge and to strengthen professional practice.

These objectives are mainly achieved through lobbying both European and

national authorities, by promoting research into property markets and services,

by increasing CEPI internal and external communications, and by supporting

the education of future real estate professionals via common educational

programmes.

During 2008, CEPI, together with a number of national associations, organised

a ‘lobby day’ to ensure that MEPs become better acquainted with real estate

matters. Many parties within the Commission and the Parliament are concerned

about the lack of regulation at national and European level for the real estate

sector, as well as for other sectors, and are waiting for the current commissioner

in charge of the internal market to be replaced at the end of the term by a less

radical key figure.

Active topics of discussion at CEPI include the environment and energy issues

and the European Standard, CEN, in relation to the services of real estate

agents, which when adopted will force CEN members to comply with the

CEN/CENELEC Internal Regulations.

The Association d’Experts Européen du Bâtiment et de la Construction

(AEEBC) was established in 1990 and

represents building surveyors and

construction experts who are

professionally qualified in the

technological and management

processes by which buildings are designed, constructed, renewed and

repaired in accordance with the national legislation of individual countries.

The AEEBC was formed to facilitate the promotion of the building surveying

and construction professions in Europe and the exchange of experience and

information between professionally qualified building surveyors and

construction experts. It represents the profession’s interests to the European

Commission and other European institutions. It was also formed to promote

the building surveying and construction expert professions throughout

Europe, to facilitate training, qualification and mutual support and

recognition, to establish practice guidelines, and to support and promote the

development of construction industry services in line with EC policy.

To date it has 17 organisations from 14 member countries which range from

Finland in the north to Italy in the south. It is estimated that each country

and its representative organisations would represent an overall membership

close to 250,000 across Europe. The SCS was a founder member of the

AEEBC and is represented in all policy and innovations within the

organisation.

14 SCSREVIEW

Euro news

Current objectives

On September 30, 2005 the new EU General Directive 2005/36/EEC on the

Mutual Recognition of Professional Qualifications became law. This is

intended to facilitate migration between EU Member States by waiving

compensation measures where possible.

Currently the AEEBC is developing a common platform or card (Euro BE) for

the recognition of its members to work in member European States. In theory

this card would facilitate migration between EU member states by waiving

compensation measures where possible within the defined profession and role.

Leonardo da Vinci programme

The Leonardo da Vinci programme links policy to practice in the field of

vocational education and training (VET). Projects range from those giving

individuals the chance to improve their competences, knowledge and skills

through a period abroad, to Europe-wide co-operation between training

organisations.

Part of the European Commission's Lifelong Learning Programme, the

programme funds a wide range of actions, notably: cross-border mobility

initiatives; co-operation projects to develop and spread innovation; and,

thematic networks. Innovation projects have always been at the core of the

Leonardo da Vinci programme. They aim to improve the quality of training

systems through the development and transfer of innovative policies, contents,

methods and procedures within vocational education and training.

The AEEBC has sponsored a successful Leonardo da Vinci bid for funding

which focuses on the creation of manuals promoting common platforms of

managerial qualifications in the field of construction.

Robert Patterson MRICS ASCS Building Surveying is the Society of Chartered

Surveyors’ representative (email: rpatterson@kla.ie).

CEEC – the European Body for Quantity Surveyors

Conseil European des Economistes de la Construction

(The Council of European Construction Economists or

CEEC) was formed nearly 30 years ago by the coming

together of representatives of various national

institutions representing the field of construction

economics (quantity surveying to the English speaking

nations) in their own countries with the aim of

promoting the profession at a European level.

The organisation comprises three voting member delegates representing the

national organisations meeting at a general assembly bi-annually in various

cities in Europe, where the many issues concerning the construction economist

are debated and a number of projects promoted.

The organisation’s work is overseen by the current President from Ireland,

Gerard O’Sullivan FSCS FRICS, Barrister at Law; the General Secretary, John

Papworth FRICS; and, two vice presidents – Peter Van der Pjil NVBK,

Netherlands, and Jacques Philippe Charpy, UNTEC president, France.

At the recent CEEC meeting held in Munich in October 2008, the following

items were discussed:

1. Publication of Steel Price Book for German construction market due in

November. This publication is available on www.constructala.de. Our

French colleagues at UNTEC produce a similar guide for the French

construction market.

2. A presentation was given by Bob Charette from Montreal, Canada on Life

Cycle Costing, which is also available on the CEEC website.

3. A CEEC Review on cost planning on infrastructure projects will be

published in the New Year encompassing surveys from Finland, Ireland and

the Netherlands.

4. A project concerning cost planning for sustainable development residential

projects is underway headed by Tim de Jonge from the Netherlands, to

research to prepare an inventory of existing initiatives and sustainability

trials, in order to assess their success and cost effectiveness. The project

team has been formed and is set to deliver within nine months. Michael

O’Connor ASCS MRICS is representing Ireland on the team.

5. Richard O’Carroll is involved in the CEEC educational project which

includes an assessment of European-based courses. Further information on

this project will be available on the CEEC website shortly.

6. The CEEC is also working on a revised office cost model and a suitable

drawing/project has been identified. Using the CEEC cost plan model each

country is to prepare their costs based on January 1, 2007 and January 1,

2008. This data should be ready for publication by mid-2009.

7. The CEEC also facilitates an educational project for students. Students are

invited to write an essay/report on a relevant topic. A prize for the best

project is awarded and the winner is enabled to present their project at one

of the bi-annual CEEC meetings. Details of this initiative will be announced

shortly.

The SCS representatives are Conor Hogan, Michael O’Connor, and Richard

O’Carroll. Further information on the CEEC is available at www.ceecorg.eu.

Graduate Quantity Surveyors – South Africa (job id 897) based in the Johannesburg and supporting various projects in South Africa and the African continent. Multi disciplined projects, Electrical, Mechanical and Civil in Power, Mining and Rail Sectors. Must have a B.Sc Quantity Surveying and some industry experience in work placements. We offer a QS graduate development programme over 24 Mths together with an assigned mentor.

Senior Quantity Surveyors based in Saudi Arabia (Job ID 645) • A degree in Quantity Surveying • 6+ years experience to include at least 2 years previous international exposure • Experience on industrial/power or petrochemical projects • Familiarity with Electrical and Controls Installation works DUTIES WILL INCLUDE • Review of enquiry documents and input into proposals • Negotiation of contracts with Clients and Joint Venture/Consortium Partners • Managing the Quantity Surveying Function on a number of projects or a single major project • Contractual Correspondence • Procurement of specialist subcontracts and services • Ensuring cost control against defined budgets • Monthly Cost/Value Reconciliation and reporting • Identification of changes in scope and schedule and negotiating agreement on valuation of same • Preparation, negotiation and agreement of final accounts.

Quantity Surveyors x4 based in Saudi Arabia (Job ID 644) • A degree in Quantity Surveying • 3+ years experience to include some international exposure • Experience on industrial/power or petrochemical projects • Familiarity with Electrical and Controls Installation works DUTIES WILL INCLUDE • Re-measure and Valuation of work in progress • Pricing Changes • Progression of Final Accounts • Ensuring cost control against defined budgets • Interface with other departments, purchasing/finance/planning and construction

WE OFFER • Attractive TAX FREE REMUNERATION commensurate with location • Interesting projects and lifestyle experiences • Internal skills enhancement courses • Excellent potential for progression and further travel within an expanding organsation.

Setting new standards of service to clients worldwide

Quantity Surveyors

Please forward CV to mryan@kentz.ie referencing Job ID: 644 and 645.

www.kentz.com

SCSREVIEW 15

Redundancy

Can we have a word… EOGHAN McDERMOTT gives advice on how to cope if the worst really does come to the worst and you find yourself out of a job.

It never seemed possible, but it’s now moving from possible to probable in

many companies. For many surveyors, every day brings the real dread of a

request to “have a word with the boss” and the certainty that the conversation

will not be about an exciting new project, but rather about the reduction of

days worked or, worst of all, termination of employment.

It’s devastating when it happens. Personally devastating. Even though each

individual affected knows that a) they didn’t cause the problem, and b) can do

nothing to solve it, it is experienced as a personal blow. Surveyors who have

been productively employed for many years face, not just the loss of the day

job, but the loss of the circle of colleagues, friends and activities implicit in the

day job. That represents a cumulative challenge which, at first glance, seems

insurmountable, particularly when the wider context is taken into account.

The figures

Economically, we are in the doldrums. The Economic and Social Research

Institute (ESRI) predicts that unemployment will soar to an average of 8%

next year, compared with a figure of 6.1% estimated for 2008. The number of

people in work is expected to have fallen by 14,000 by the end of the year

and by a massive 47,000 in 2009. There were 6,513 redundancies in building

and civil engineering alone already this year. In the metal manufacturing,

engineering and other manufacturing sectors, some 6,588 redundancies have

happened. While, in other areas, particularly the lower-skilled and part-time

sectors of the economy, the people losing their jobs have been mostly

female, in the construction-related sector, more than two-thirds of the people

made redundant were male. Simply put, people are losing their jobs when

they never expected to, and finding it tougher to get a new one.

The recruitment market

The market has done a complete 180˚ turn since this time last year. It has

moved from a buyer’s market to a seller’s. In ’06 and ’07 candidates would fire

their CVs off to a few recruitment companies and then sit back and wait for

the offers to roll in. Now this has all changed. In 2008, candidates need to get

hold of every opportunity that they otherwise would have let pass them by.

This means working hard at the other things too. Good networking is not

about meeting tons of people, each of them desperately hunting business.

Good networking is building and using an informal web of people who you

actually have a relationship with and who can vouch for you and give you a

hand. When looking at going into different roles or organisations remember

that Ireland is a village and people you know should be the first port of call

when you’re seeking an opportunity. People like friends, ex-colleagues,

relations. They love to be asked for advice and help. But the manner of

asking is important. When a friend is approached in a panic, with the naked

assumption that they might have a job to offer, the friend is likely to feel

guilty and avoidant, because they simply can’t help. When a friend is

approached in a coolly professional way with a good CV and asked to keep at

the back of their mind the possibility of recommending the CV’s owner,

should the opportunity arise, they are empowered to be genuinely helpful.

Use professional help

Professional help is important too. A deflationary approach to one’s own

career (“I can’t afford to pay a professional”) is not a good idea. If you’ve

been a surveyor for many years, the one thing it’s fair to suggest is that you

probably lack job-seeking skills and the capacity to re-position yourself in the

16 SCSREVIEW

Redundancy

market. An investment in help – even in ostensibly simple tasks like updating

your CV – can be money well spent. And, with luck, employers who can do so

will extend some financial assistance in this area.

Three years ago, a CV would get added to a list for consideration without

much difficulty. Talking to a client recently, I mentioned our policy of binning

CVs if they contain misprints. He said that his company had done the same

until 2003, when they found themselves so desperate for staff that they

ignored poor spelling, grammar and, in some cases, coherence. Those days

are gone. Employers are now in the position of power. And it will take more

than good grammar to get past their cull. In a recent survey from UrHired.ie,

54% of employers said they noticed a significant increase in the number of

CVs being sent to them so far in 2008.

CVs must now contain elements that get the HR person saying: “God, I

wouldn’t mind talking to your man”. The requisite experience will have to be

there and it’ll have to be expanded upon to show, not just what you did, but

what you gained from it. Every piece of experience you cite should prove a

skill, not an occurrence; if you managed a group of people, how did you do it

well? If you negotiated a deal, what shows you got a good outcome? If you

planned a strategy, what proves it was any good?

Once you’ve got the CV in the door the next step is the interview. The civil

service in this country pioneered what’s called ‘competency-based’

interviewing whereby, instead of asking general questions of a candidate,

interviewers would probe areas of the person’s character relevant to the job.

In other words, if they’re hiring a surveyor they’re going to ask them to prove

they’re good with projects and can negotiate, rather than seeking opinions

on the banking crisis. It brings a clarity to interviewing that was absent for a

long time, but it also proves a principle we’ve been hammering home to

interviewees for years; figure out the characteristics you need to do the job

well and prove you have them.

Provide the evidence

The easiest way to figure out what’s required is to ask yourself what your first

day at work would be like and what skills you’d deploy. If it’s a day of

meetings, then you need communications skills. If you’re starting with a team

briefing, then you need to be able to motivate staff. If you’re going to be

developing a project, then you need a capacity to plan and implement.

When you figure these out, isolate one at a time and work out how you can

illustrate that specific ability through examples of past experience. Here’s a

good rule to follow: no assertion without evidence. So, go back to the skills

and begin to examine your career to date to find that evidence. What’s your

best example of managing people, or communicating, or motivating, or

managing a project? Remember, when you’re looking at your examples, it’s

not just your experience that matters, but how and why you did what you

did. Too often interviewers get a list of experiences, not any demonstration of

what the interviewee did and how this fits with the job they’re seeking. Show

the interviewer what you learned from each experience, then link to the role

on offer.

Above all, give yourself time and teach yourself resilience. The new phase in

your career may not begin immediately. But if you stay focused and

optimistic, it will begin.

Eoghan McDermott

Eoghan is Head of Careers at

The Communications Clinic.

Eloise Heron – back to the future Chartered Surveyor Eloise Heron says that now is a great time to upskill. For

anyone facing any sort of difficult professional situation, adding skills to

your CV makes sense. In Eloise’s case, her motivation was slightly different.

Having spent 17 years in the commercial property business, she wanted to

develop her knowledge and her skills in a very precise direction. She signed

up for a 15 month programme leading to the award of a Masters in

Sustainable Development. Eloise left her position as Divisional Director,

Professional Services Department, Lisneys, and is now in class three days a

week and in work placement two days a week. Her placement is with the

Property Division of An Taisce where she is working on the re-opening of

the Boyne river and its complex of canals, which circumvent the river’s

rapids. She feels that the course opens up many possibilities to her, as the

course is very relevant and complimentary to her primary degree and is

certain that it is a positive experience that she would recommend to others.

Options for further study

The SCS accredits several post-graduate courses:

n MSc in Real Estate – DIT Bolton Street;

n MSc in Planning and Development – DIT Bolton Street;

n MSc in Spatial Planning – DIT Bolton Street;

n MSc in Spatial Information Management – DIT Bolton Street; and,

n MSc in Rural and Urban Planning – University College Dublin.

The DIT also has a MSc in Quantity Surveying, for which it has applied for

accreditation.

The Society also recognises RICS-accredited qualifications. RICS accredits

a number of UK-based distance-learning courses, including a number of

them at the College of Estate Management.

SCSREVIEW 17

Repairs

Dilapidations and the burden of repair PAT McGOVERN reviews that key part of the landlord–tenant relationship – the tenant’s obligation to repair.

Landlords have invested considerable sums in their property portfolio during

the boom times of the Celtic Tiger. As the current recession takes hold and

there is an overall slowdown in economic activity, it is essential that landlords

and property investors take time to consider their investment and put in

place a policy of good estate management.

As tenants concentrate on their core activities and attempt to reduce costs

across the board, they may potentially choose to become ignorant of their

repairing obligations in their leases. Maintenance costs, repairs and

decoration could be far down the list on a tenant’s priorities and it is under

this economic cloud that landlords need to take a pro-active approach to

ensure that their property portfolio remains in good tenantable condition and

continues to yield a good return over the long term.

The Chartered Building Surveyor is expertly placed to advise landlords in all

aspects of good estate management and landlords should now be actively

considering carrying out interim Schedules of Dilapidations on their

portfolios.

The obligation to repair

Most tenants hold their premises under a full repairing and insuring (FRI)

lease, and for the most part are unaware of the significance of the repairing

clauses to which they have committed.

In commercial leases the repairing covenant is usually split into a number of

separate clauses:

n the basic obligation to repair;

n a separate obligation to redecorate periodically; and,

n a covenant to yield up in repair.

Generally this means keeping the building in repair, i.e., in good tenantable

condition. A tenant is bound to keep the property of the landlord in

“substantial repair”, but is not bound to do “mere ornamental repairs”.

It is very important that the tenant reads the lease as a whole and not read

any one clause in isolation from the rest of the lease. The tenant should

obtain legal advice before entering into any lease arrangement and the

premises should also be inspected by a Chartered Building Surveyor.

Repairing obligations

What typically should a tenant be concerned about in terms of their repairing

obligations? During the term of a lease, a landlord can serve a ‘Schedule of

Dilapidations’ on a tenant, which is essentially a notice to repair. The tenant

must now decide what their obligations are under the terms of the lease.

Take the roof, which is always a significant element of repair both in terms of

cost and disruption to the day to day running of the business should it happen

to fall into disrepair. The big issue for a tenant is how far he/she should go in

repairing the landlord’s building, e.g., a flat roof covered with asphalt that is

leaking. A tenant’s approach to this repair will differ significantly, depending on

whether the schedule is an interim situation served perhaps midway through

the lease or a terminal situation at the end of the lease period. The only

obligation on the tenant is to repair, so technically going up with a bucket of

bitumen and a trowel will comply with his repairing obligations. However, this

will necessitate annual/ongoing maintenance and the risk of increased water

damage to the interior is obvious. A prudent tenant will choose to overlay the

roof with a torch-on felt, giving them perhaps a 15- to 20-year repair.

In the case of a terminal schedule, the landlord may not be happy with such

a patch repair. He may not even want to accept a torch-on overlay and insist

on an asphalt renewal. However, the obligation on the tenant is to repair and

the difficulty for the two surveyors acting for the tenant and the landlord is

to agree on a satisfactory acceptable solution. Very often a monetary

contribution towards the cost of replacing the roof is agreed on.

Another example is blemishes to cladding: a surveyor can argue that this is

not disrepair. It is a blemish only, which is not having any detrimental

disrepair effect on the building. It does not affect the landlord’s reversionary

interest and there is no loss.

18 SCSREVIEW

Repairs

Role of the surveyor

So how does a surveyor set about advising a client where there are failures by

a landlord or tenant to comply with their legal obligations to repair, decorate

or reinstate alterations?

There are four basic steps a surveyor should consider:

1 clarify the instruction by issuing terms and conditions of engagement and

advise on the likely fee. Be clear on whether or not it is an interim or

terminal schedule that is required;

2 ensure that you as surveyor have no conflict of interest with either the

landlord or tenant;

3 seek all relevant documentation relating to the tenancy/lease agreement,

ingoing schedule of condition, licences or consents issued during the

tenancy; and,

4 before going to site, be fully aware of the extent of the demise and the

level of repairing obligation, e.g., is it a full repairing and insuring lease or

is it confined to the interior only or particular floors within the building.

Doing the works vs damages

When a landlord serves a Schedule of Dilapidations on a tenant, they

generally have two options:

a) physically do the repair works themselves; or,

b) pay damages, i.e., agree on a monetary settlement to cover the cost of

the landlord executing the works.

Most tenants when running a business don’t have the time or resources to

physically get the repair works done so the most common approach (and

often the most expensive) is to pay a sum of money to the landlord. This is

usually agreed between the landlord’s and tenant’s surveyors.

A prudent tenant will have a sinking fund in place to cover the settlement of

such a dilapidations claim. But how do they know how much to set aside? All

leases are for a fixed term, so if a tenant’s financial advisor knows that a lease

is coming to an end in five years, they can employ the services of a Chartered

Building Surveyor to prepare a ‘Schedule of Anticipated Dilapidations’ and

have these costed. This schedule will obviously be subject to negotiation with

the landlord’s surveyor and his estimate of the cost of the claim. However, it

will give a tenant a good indication for their exposure under the terms of the

lease and a sum can be set aside each year to cover the anticipated claim

(sinking fund).

Precautions a tenant can take

The tenant should carry out annual maintenance on the building to ensure

that it is maintained to a reasonable standard. If this is not being done, then

a Chartered Building Surveyor should be employed to assess the building’s

condition, prioritise repairs and prepare a planned maintenance programme

over a three-, five- or ten-year period. In this document, works will be

prioritised and routine day-to-day maintenance will be scheduled in at the

appropriate times.

Prior to signing a lease, a tenant should consider an ingoing schedule of

condition. The purpose of such a schedule is to record the condition of the

property at a particular moment in time, i.e., at the signing of the lease. The

usual purpose of the schedule, which should be agreed between both parties

and then attached to a lease, is to modify or clarify the repairing obligations,

the idea being that the tenant is not obliged to put the building back into

any better condition than that existing at the commencement of the lease.

Surveyors must take care not to put a “spin” on the schedule and it should

be just an evidential record.

Services such as heating, lighting, ventilation and air conditioning are an

important consideration as these can represent up to 40% of the costs of

maintaining a property. If opening up works are necessary, then this should

be undertaken, e.g., suspected timber decay.

Be prepared

In conclusion, as landlords seek to maximise the return on their investment,

tenants are coming under increased pressure to keep their premises in good

condition. They must be aware of their repairing obligations under the terms

of the lease and prepare financially for this inevitable outcome.

Pat McGovern

Pat is the principal in Pat McGovern and Associates,

Chartered Building Surveyors with offices in Dublin,

Navan and Cavan.

SCSREVIEW 19

Management

Professional negligence and how not to

GERARD O’SULLIVAN explores the law in relation to the professional responsibilities of the Chartered Surveyor.

Surveying has taken its place among the many professions in the modern

world which offer a person opportunity, respect and privileges. In partnership

with those advantages go responsibilities and liabilities which are the focus of

this article. For the professional surveyor, having achieved proficiency in their

chosen skill, they will find their client expects a standard of service for which

any failure on their part will grant the recipient compensation. So I must

confess from the start that this article may not fulfil the intention of its title,

but I hope it will give those in practice some guide as to how to avoid being

successfully sued.

Professional competence

Irish law has come up with a simple definition of the professional person as

one: “…exercising and professing to have [a] special skill” (Blaney J, Hughes

v JJ Power Ltd HC 11/5/1988).

The law then imposes on a professional person duties to a client of a

standard to be expected from a reasonably careful member of that

profession. That duty can be summarised as a duty to use reasonable skill and

care in the course of their employment.

“Where you get a situation which involves the use of some special skill or

competence, then the test as to whether there has been negligence or not is

not the test of the man on top of the Clapham Omnibus, because he has not

got the special skill. The test is the standard of the ordinary skilled man

exercising and professing to have that special skill; it is well established law

that it is sufficient if he exercises the ordinary skill of an ordinary competent

man exercising that particular art.”

(Bolam v Friern Hospital Management Committee [1957] 1 WLR 528).

This duty can arise under both contract and tort of negligence.

The courts will give due deference to customary practice, traditions, rules of

self regulation and the high intellectual calibre of members, and they regard

professions as being substantially competent to determine and require a

satisfactory standard of competence in the performance of professional

duties.

Professional negligence

If a member of a profession can show they adhered to the customary, general

or approved practice of their profession, this should normally be sufficient to

relieve them from accusations of negligence. However, Irish law has

somewhat qualified the reliance on customary and approved practice by

noting that a professional: “..cannot be said to be acting reasonably if he

automatically and mindlessly follows the practice of others when by taking

thought he would have realised that the practice in question was fraught with

peril for his client and was readily avoidable or remediable…. but if it can be

said, if at the time, on giving the matter due consideration, he would have

realised that the impugned practice was in the circumstances incompatible

20 SCSREVIEW

Management

get sued

with his client’s interest, and if an alternative and safe course of conduct was

reasonably open to him, he will be held to have been negligent.” (Henchy J

Roche v Peilow 1986 ILRM 189 SC).

Generally the law does not imply a warranty that a professional delivering the

service will achieve a desired result, but it does assume he or she will use

reasonable care.

“A surgeon does not warrant that he will cure the patient.” (Graeves v

Baynham Meikle [1975] 4 BLR 56).

“In relation to errors of judgement it may, or may not, be negligent; as it

depends on the nature of the error. If it is one that would not have been

made by a reasonable competent professional man professing to have the

standard and type of skill the defendant held himself out as having and

acting with ordinary care, then it is negligent.” (Lord Fraser –Whitehouse v

Jordan [1981] 1 All ER 267).

Where a professional “holds himself out as being a specialist in a particular

field he is required to attain to the ordinary level of skill amongst those who

specialise in the same field. He is not required to attain to the higher degree

of skill and competence in that particular field.” (Walsh J

O’Donovan v Cork City Council [1967] IR 173).

The professional acts as an expert and independently of the client whilst still

being the agent of the client.

“The fact that the architect is not independent is perfectly consistent with the

proposition that he is required to act in an independent manner in certain

situations.” (Jackson J Scheldebouw B v St James Homes (Grosvenor Dock)

Ltd [2006] EWCH 89).

The Courts since Hedley Byrne & Co Ltd V Heller & Partners Ltd[1964] AC

465 have held that where it can be established that a special relationship

exists between the service provider and the recipient, pure economic loss will

be a recognised form of damage.

“…if someone possessed of a special skill undertakes, quite irrespective of

contract, to apply that skill for the assistance of another person who relies

upon that skill, a duty of care will arise….” Lord Morris.

Further, the Irish courts in McShane Wholesale Fruit and Vegetable ltd v

Johnston Haulage Co Ltd [1997] 1 ILRM 86 Flood J, stated that: “the quality

of the damage does not arise. It can be damage to property, to the person,

financial or economic….the fact that damage is economic is not in itself a bar

to recovery where the other elements above stated are present.”

Misstatement

As professionals we often make statements, either on our own behalf or on

behalf of clients, which others may rely on.

The law on fraudulent misstatement, as stated in Derry v Peek [1889], states

that a fraud is shown when a false representation has been made knowingly

or without belief in its truth, or recklessly. In Pearson v Dublin Corporation

[1907] AC 351 fraud was held to exist even when the representor did not

necessarily know that his statement was false nor could he rely on the

insertion of a clause stating the contractor was to verify all representations

and not rely on their accuracy.

However, later the more recent case of Dublin Port and Docks Board v

Brittania Dredging Co Ltd 1968 IR 136 involving an inaccurate survey for a

dredging contract where it deemed the contractor had inspected the site, the

defendants were found not liable as the statement characterised it as

innocent misrepresentation, provided honestly and in good faith.

Under contract it is open to the client and the professional engaged to set

down in writing specific conditions of engagement. However, under the

Building Control Act 2007, quantity surveyors and building surveyors will now

be obliged to comply with some of the following mandatory obligations to

their clients:

n provide only services for which they are qualified and be clear on what

services are provided; and,

n their conditions of engagement must be in writing with lawful, fair and

reasonable terms naming the surveyor, contact details and registration

number.

If you are unfortunate to be found liable, even if only in part, the ability to

limit the extent of your liability can be difficult. Under the Civil Liability Act

1961 Part III, subject to the rule that the plaintiff cannot recover more than

the total amount of damages he has suffered, the injured party is allowed to

recover the full compensation for his injuries from as many sources as

possible. Concurrent wrongdoers should be entitled to recover fair

contribution from each other in respect of damages due to a plaintiff, but

that does not mean they can limit it to the portion for which they are liable

(Iarnród Éireann v Ireland [1996] 2 ILRM 500 SC) particularly if the more

guilty party is a man of straw and/or not insured.

Be careful and keep up

Finally, the lesson to be learned is that if you want to practice your craft,

keep up with the normal standards of your profession, buy sound insurance,

be careful of free advice and don’t bite off more than you can chew.

Gerard O’Sullivan FRICS FSCS

Gerard is a barrister at law.

SCSREVIEW 21

Rural practice

If you go down to the woods today… WILLIAM MERIVALE looks at the issue of forest certification and the important role the Chartered Surveyor can play when specifying timber.

At first glance many readers of the SCS Review might be forgiven for thinking

that forest certification has little relevance to their work. In the course of this

article, I hope I may be able to demonstrate how important it actually is to all

those involved in the construction industry.

A short history

It is universally accepted that the forests of the world, particularly the tropical

world, are under threat and while the exact rate of deforestation is a matter

of dispute, it is safe to say that an area equivalent in size to the island of

Ireland – at the very least – is disappearing every year. Quite apart from the

tragic loss of species, habitat and indigenous cultures, deforestation also

accounts for about 20% of global carbon emissions. With regard to climate

change it is a very serious problem indeed. The double tragedy is that when

forests are properly managed their vital role as carbon sinks can be enhanced.

The 1980s saw a number of international efforts aimed at regularising trade

in timber products, ensuring sustainable forest management and combating

widespread illegal logging, but despite these, tropical deforestation continued

to accelerate. After the Rio Earth Summit in 1992, which aimed to get

agreement for binding conventions on, amongst other things, the sustainable

development of forests, some progress was made with the establishment of

credible and independent mechanisms to verify claims made as to the

provenance of timber products.

Today, there are two international forest certification schemes of consequence

– the Forest Stewardship Council (FSC), which was underwritten by the World

Wildlife Fund and inaugurated in 1993, with about 90 million hectares now

certified in 45 countries; and, the Programme for the Endorsement of Forest

Certification Schemes (PEFC), a European grower-led initiative started in

1999, and now the larger of the two with over 200 million hectares certified in

24 countries, and with 35 national member organisations. PEFC arose due to

the initial difficulties, subsequently largely addressed, that FSC faced in

Europe and North America. FSC’s origins lay in ensuring sustainable forest

management practices in extensive areas of public lands leased to logging

companies in the tropics, whereas most forests in the temperate world are

privately owned and, especially in Europe, relatively small.

As both schemes arise from the same source and work to the same

internationally accepted definitions of sustainable forest management, the

differences in content and methodology are minimal and the two are

accepted as equivalent by most of the European governments who have

prescribed timber procurement policies. Many stakeholders see forest

certification on a global level as a battle between the two schemes; this is

regrettable as this perception damages the credibility of certification and

does not contribute to the overall goal of sustainable forest management. It

is better to view the competition as both beneficial and necessary as it raises

the standards of both organisations, keeps costs in check and increases

supply options.

Certification in practice

Sustainability and certification have become two of the buzz-words of our

time. (As I write, my eye is drawn to a full-page advertisement for coffee on

the back cover of an Irish Times magazine with the caption “Now Kenco uses

beans from Rainforest Alliance certified farms”.) Society is becoming

increasingly aware that the world’s resources are finite, more so than ever

because of the pressures of a rapidly expanding population. Chartered

Surveyors are particularly well versed in sustainability measures as applied to

22 SCSREVIEW

Rural practice

the built environment in terms of increasing energy efficiency; nevertheless,

it remains a challenge to convince many within the construction industry of

the importance of specifying certified timber, and consequently we continue

to use huge volumes that derive from unsustainably managed and illegally

logged forests. (It should perhaps be mentioned that the paper, print and

publishing sectors are embracing the concept rather more quickly than the

construction industry is.)

The process of forest certification is designed to provide independent

verification that forests are managed sustainably, according to prescribed

standards of sustainable forest management. The basic objectives of

certification are to ensure that consumers of forest-based products can be

assured that those products originate from trees which have been harvested

legally and from forests which have been independently assessed as meeting

the most rigorous, practical standards of sustainable management. Certified

forests have to meet those standards based upon the so called “Three Pillars

of Sustainability” – the environmental, social and economic. Accordingly,

forest management practices must ensure, for example, that no more wood is

harvested than is re-grown, prevailing laws are adhered to, the rights of

indigenous peoples, workers and owners are protected, wildlife habitats are

maintained and biodiversity conserved.

In practice, there are two separate certification processes. Firstly, the

actual forest management standard which determines rules and guidelines

for the management of the forests. However, its remit stops at the forest

gate. Then there is “Chain of Custody” certification. The name of this

process is essentially self explanatory and it is designed to prove that

material which is verified as coming from certified forests is actually what

it says it is. For the final consumer to be assured that he is buying material

which originated from properly and legally certified forests, there has to be

an unbroken chain of custody from the forest through all the production

and conversion processes to the final user. Chain of Custody certification,

then, is of particular relevance and importance to construction

professionals involved in specifying the materials to be used, and in the

promotion of the finished building to the eventual occupier as to its green

credentials.

How to achieve Chain of Custody certification

To be awarded a Chain of Custody certificate, an enterprise must put in place

a robust and auditable system, which ensures that there is full control over

incoming raw materials, through the manufacturing or conversion processes

to eventual delivery to the customer. The system will be checked and audited

by an independent certifier, who is accredited by the relevant certification

scheme. The certificate will be valid for a number of years, usually five, but

will be subject to annual audit to ensure that the enterprise continues to

operate the systems required by the terms of the certificate.

If there are existing management processes in place, such as ISO 9001, it is

probable that Chain of Custody certification will be relatively easy to

implement and the certifier will almost certainly be able to guide the

applicant through the process at minimum cost. It is therefore recommended

that an applicant considers implementing ISO 9001 and/or ISO 14001 (the

environmental standard), if this has not already been done, before moving to

Chain of Custody. However, this is not always practical, nor is it essential.

Inevitably the process adds costs to an enterprise or project, but with the

increasing need to “be seen to be green”, as well as a genuine desire on the

part of many actually to be green, most certified companies agree that the

benefits outweigh the costs. Meanwhile, with less than 300 million of the

world’s almost 4,000 million hectares of forest certified as being sustainably

managed there is still a big task ahead of us all, and many Chartered

Surveyors are in a key position to promote the use of certified timber

products to clients and project partners alike.

William Merivale

A Chartered Rural Practice Surveyor, William is a

partner in OBM Consultants, Cork, and is a director and

the National Secretary of PEFC (Ireland) Ltd.

SCSREVIEW 23

Finance

Much obliged! The Prompt Payment of Account Act 1997 obliges public sector organisations to pay their bills promptly. JOHN MINIHANE of Mason Hayes and Curran explains the details of the Act.

The purpose of the Act is to ensure that certain public sector bodies, and

public sector main contractors (purchasers) pay amounts due to their

suppliers within specified time limits. An automatic entitlement for suppliers

to receive interest is provided for in respect of amounts paid outside these

time limits. Late payments arising in commercial transactions between

commercial parties are regulated elsewhere (S.I. No 388/2002 – European

Communities (Late Payment in Commercial Transactions) Regulations 2002).

The Act came into operation on January 2, 1998. The original schedule of

public sector bodies obliged to comply with the Act has been amended

(please see S.I no. 383/2000- Prompt Payments of Accounts Act, 1997

[Amendment of Schedule] order 2000). The provisions of the Act are also

applicable to subsidiaries of the relevant public sector bodies.

The Act also applies to main contractors appointed under public sector

contracts. So where a contractor sub-contracts or obtains goods or services

from another party in respect of a public sector contract, the contractor must

comply with the provisions of the Act.

What is “prompt payment”?

For public sector bodies, the Act specifies that payment must be made to

suppliers on or before the date on which payment is due under the terms of

any written contract. In the absence of a written contract specifying a

payment date, payment must be made within forty five days of the receipt of

an invoice or delivery of goods or services, whichever is later. An invoice can

be sent by post or electronic transmission.

The Act obliges main contractors to public sector bodies to pass on to its

suppliers or sub-contractors the benefits of being paid promptly by the public

sector body. Therefore, the same time limits (as for public sector bodies) for

payment apply to a main contractor.

Penalties for late payment

If a purchaser fails to make payment in accordance with the Act it must pay

an interest amount on the outstanding payment. Interest is calculated in

respect of the period starting on the date after the due date and ending on

the date when payment is made. This interest payment cannot be waived by

the supplier and should be included with the amount payable for the goods

or services without demand for its payment being made by the supplier. The

interest rate is fixed by order of the Minister for Enterprise and Employment

after consultation with the Minister for Finance and the rate may be and has

been amended periodically by the Minister. The current rate is 0.0294% per

day.

Invoice queries

The purchaser has ten working days to return an incorrect invoice which must

be accompanied by a written statement identifying the alleged defects that

prevent payment being made. In these circumstances interest will not become

payable until ten working days after the purchaser receives a corrected or

replacement invoice. In circumstances where a purchaser requests an invoice

later than the ten-day period for which the Act provides, the subsequent

period will be reduced by the corresponding number of days. For example, if

an invoice is returned by the purchaser to the supplier after 14 days then

interest would become payable six days after the public body receives a

corrected invoice. If the amount due is disputed by a public body then any

portion due in respect of goods or services which are not in dispute must be

paid for in compliance with the Act.

Disputes as to interest payment

If the payment of or obligation to pay an interest penalty is disputed by a

purchaser the supplier may refer the dispute to arbitration. The arbitrator may

be selected by agreement between the parties or in default of such

agreement be appointed by the President of the Law Society or by such

other person prescribed by the Minister. The Act does not alter the right of

the supplier to bring a case to the civil courts.

Requirements of suppliers

The Act does not oblige payment to be made to a supplier who has failed or

refused to comply with a request to produce a tax clearance certificate and it

expressly extends the statutory time limit for payment where there are delays

in furnishing a tax clearance certificate. Also the Act does not affect the

deduction of withholding tax from any payment to a supplier.

John Minihane ASCS MRICS

John is a partner, specialising in real estate, with

Mason Hayes+Curran.

24 SCSREVIEW

Finance

Time to join forces? MICHAEL NEARY looks at mergers and acquisitions in quantity surveying and asks - what are the strategic options available to professional firms?

The present economic environment presents challenges for businesses across

all sectors. The current difficulties faced by the banks have been well

highlighted in the media. However, amid the challenges it should be noted

that there also are significant opportunities available to well-structured

businesses. It is now an opportune time for strategic buyers with access to

funds to acquire good businesses at prices that make economic sense.

However, it is not always possible to acquire. This is especially true in the

case of professional firms, where in our opinion the personnel skills involved

make mergers the more efficient method of consolidation and growth. In any

merger, the “people” factor is vital to the success of the transaction, and the

principals must have the same vision for the future.

Advantages of mergers

With the effects of the credit crunch currently causing company valuations to

be revised downwards, a number of businesses should consider their strategic

options. For firms within the quantity surveying sector the benefits of a

merger can be plentiful:

n quality staff and additional skills can be obtained, and valuable

management and industry knowledge harnessed;

n consolidation and regional or national growth can be achieved in a cost

efficient manner;

n diversification of services and long-term prospects through the acquisition

of complementary businesses;

n mergers provide an excellent opportunity to share and reduce costs.

Mergers allow the participating businesses to restructure and achieve cost

savings in areas such as employee restructuring, increased purchasing

power, improved utilisation of office facilities and shared promotional

costs, all of which can reduce unnecessary overheads; and,

n mergers can be completed without taking on additional bank debt, a

major advantage in today’s environment of limited credit.

Areas to be addressed in a merger

A number of key issues need to be considered for a successful integration.

Foremost among these are staff-related issues. Increased staff efficiencies

should be targeted, and the need to make staff cuts may arise. Keeping staff

informed of developments is crucial to obtaining their co-operation and

minimising any potential disruption. Key staff need to be involved and

retained, and areas such as relocation issues, pay differentials, and trade

union matters all need to be adequately addressed. Successful integration in

other areas such as technology and communication, invoicing and purchasing

systems, HR policies and procedures payroll, etc., will all need to be attained

to achieve the benefits associated with merging. Inadequate planning and

ineffective control over the merging process can lead to numerous post-

transaction difficulties, including:

n the merged business does not perform as well as expected, and

anticipated synergies are not achieved;

n expected cost savings do not materialise and inefficiencies arise;

n the business cultures prove incompatible, resulting in process and

personality clashes; and,

n key people leave. Smaller, owner-managed businesses are often reliant on

the presence of the owner or key staff to be successful, and deals should

be structured to tie in these staff to the medium- to long-term interests

of the new entity.

The decision to merge

There are a number of areas a business needs to consider both in advance of

and throughout the process of merging, including:

n techniques such as SWOT analysis are beneficial in providing an

assessment of the company’s current position and highlighting areas

requiring attention;

n management need to clearly identify their aims for any merger or

acquisition, ensuring any proposed transaction is consistent with the

strategic direction of their business;

n a clear profile of the sort of firm required to achieve strategic goals is

necessary and potential targets should be identified. Often the expertise

of a professional firm can be of significant assistance in achieving this;

n approaches need to be made to the owners of the target business. Issues

such as the reasons for such a deal, methods of finance, future business

plans, etc., will all need to be discussed;

n evaluating and assessing the target business through financial and legal

due diligence is important in ascertaining all liabilities and issues

associated with the business, and professional advisers can help in this

process; and,

n agreement over the value of a business is a key element of any

acquisition, and achieving the best price is a matter of skilful negotiation.

Even in the event of a merger it is still beneficial to be aware of how

much the other business is worth.

In the current economic climate there will be significant opportunities

available for quantity surveying firms seeking to merge. A successful merger

can be the most effective way to achieve a number of strategic objectives,

whether it be consolidation, a reduction in cost base or to achieve growth.

With the correct strategy and effective management a merger allows these

objectives to be realised, even in the current recessionary period.

Michael Neary

Michael is Corporate Finance Partner at Grant Thornton

which provides audit, financial planning and advisory

services and is a leading accountancy firm.

SCSREVIEW 25

Finance

Managing your cashflow JOHN O’CALLAGHAN provides timely advice on managing cash in a downturn.

As the media continues its relentless focus on the current economic downturn

and the collateral damage that downturn has caused, it is becoming

impossible to watch television or read a paper without getting the sense that

we are witnessing the fundamentals of Irish business collapse around us.

Strangely enough, for many there is also the feeling of a separation from the

events taking place - like they are somehow immune to the effects of this

current crisis. But rest assured that without proper strategic action, no one is.

It is imperative for businesses to have a strategy addressing the effects of this

downturn rather than risk becoming a victim of it. To have a complete

strategy we must first deal with the metrics of our business. Professional

practices have three key profit drivers. These are revenue (fees), direct costs

(generally people costs) and overheads (rent and administration, etc.) and we

should deal with each of these areas in turn.

Revenues

Our clients drive our revenues, and while we collectively advocate keeping

close to our clients, in reality this does not occur as much as it should. Ask

yourself: when is the last time you caught up with a client just to see how

they are? A close client relationship will facilitate better credit control policy

and assist in negotiating more favourable billing practices where necessary.

Maximising your relationship with existing clients is only half the battle. Firms

must also be flexible to reap the benefits of a changing market. Construction

based businesses are experiencing particular difficulties. Public Private

Partnership (PPP) work is an area many businesses are particularly

concentrating on. Keeping a sharp focus on this type of sector and also on

expanding markets (e.g., Middle East) is important for generating workflow.

Direct costs

As the economy expanded in past years, it was increasingly difficult to find

and retain talented people. Now that business is contracting we see staff cuts

being announced on a regular basis. A balance needs to be struck between

reducing direct pay costs and potentially destroying a talent base built up

over a number of years.

Reducing salary costs is therefore an area requiring creativity whereby it may

be possible to retain most of your people while reducing costs at the same

time. Consider sabbaticals, school holiday leave, job sharing, salary

cuts/freezes. These scenarios can minimise costs but preserve your

intellectual asset.

Overheads

Tight overhead control is critical and can generate savings which have little

adverse effect on the business. All discretionary expenditure, e.g., travel, IT,

administration, entertainment, etc., should be reassessed as to necessity.

Senior managers would do well to review overheads on a line by line basis

and balance their necessity against retaining staff.

Getting the balance sheet right

Professional practices have three key balance sheet numbers: work in

progress (WIP), debtors and cash. The challenge is to turn both debtors and

WIP into cash as soon as possible.

All discretionary expenditure … should be reassessed as to necessity.

WIP

Knowing your client and any potential assignment are crucial to generating

cash. Exercise of robust credit control reviews prior to commencement of

assignments will minimise future write-offs. Involvement of your finance team

at an early stage will also identify areas where you will run into WIP build-up

and an appropriate staged billing process should be negotiated if possible. In

addition, where pre-agreed billing points exist, it is important to consider

these in work allocation. Prioritising a job close to a billing point can help

with cash generation. The challenge with WIP is to turn it into a debtor as

soon as possible.

Debtors

Collection of monies owed to your business will become more difficult as the

economy contracts. Addressing this area early is important and your debt

collection team may need strengthening. In addition, your professional staff

will hopefully have a close working relationship with clients, and involving

them as part of the collection process is important. A well-timed call from a

project manager to their client counterpart can often elicit a payment

promise earlier than respective finance departments contacting each other.

Other issues to consider in converting debtors to cash include incentives for

early payment and invoice discounting finance. In addition, many professional

practices issue ‘payment requests’ rather than VAT invoices. This can have the

effect of deferring the liability to pay VAT on sales until receipt of the debt.

You should contact your tax advisor if you consider using this system.

In general as mentioned above, the challenge with debtors is to turn them

into cash as soon as possible.

The key messages

In difficult times it is important to focus on areas you can control. In short:

n pay attention to key client relationships;

n be innovative in how you manage your people;

n watch overhead leakage; and,

n have strong WIP, debtor and cash management.

John O’Callaghan

John is an Audit Partner with BDO Simpson Xavier.

26 SCSREVIEW

Legal matters

Case law review

Hogan v Byrne & Anor; Laffoy J, [2008] IEHC 287

The plaintiff sought an order under s.38 of the Arbitration Act 1954 to set

aside or, alternatively, an order under s.36 remitting for reconsideration an

arbitration award. The award arose from the sale of an accountancy practice.

The dispute related to the price payable. The arbitrator made an interim

award in September 2003 and a final award in 2007. The plaintiff argued that

there was an obvious and fundamental error on the face of the final award in

that it was argued that there was a patent mistake in the monetary

calculation (being one of the grounds set out in Keenan v Shield Insurance as

sufficient to invoke s.36 of the 1954 Act). In dismissing the plaintiff’s

application, the judge found that there was not a patent error because, as a

matter of law, the arbitrator was not required to give reasons and therefore

the request to remit the award to do so could not be granted. The judge also

found that as the methodology for calculating the monetary sum was the

subject of the interim award, and having also confirmed that the interim

award and the final award were two awards, then the plaintiff could not

challenge that distinct interim award as part of challenging the final award.

Córas Iompar Éireann and Iarnród Éireann (Applicants) and An

Bord Pleanála (Respondent) and Sligo County Council (Notice

Party) Clarke J; [2008] IEHC 295

This was a judicial review of a decision by the respondent relating to works

completed at Ballymote Railway Station in Sligo. The applicants had

commenced development work, which included the erection of several

communication masts, when the notice party sought to have the station

building declared a protected structure under the provisions of the Planning

and Development Act 2000 (the “2000 Act”). A dispute then arose as to the

planning status of the relevant mast involving the interaction of provisions of

the 2000 Act exempting development relating to works carried out in

connection with the proper running of railway lines and provisions of the

same Act for the protection of protected structures.

The Notice Party applied under s.5 of the 2000 Act to the Respondent

seeking a declaration as to whether or not the works were exempted

development and the Respondent declared that the works were not exempted

development. The Applicants sought a judicial review of this decision.

The judge found that, on the basis of the proper interpretation of the 2000

Act, s.57 has the effect of de-exempting any development which would

otherwise be exempted unless the development concerned meets the criteria

for not materially affecting relevant features of the protected structure as set

out in that section of the 2000 Act. In reaching this view, he expressly

confirmed that while the established jurisprudence of the courts confers a

very significant margin of deference to the planning judgments of the

respondent, a different situation applies where it is alleged that the

respondent has misconstrued any relevant statutory provisions. In such

circumstances a decision of the respondent is liable to be quashed by the

court if the court is satisfied that, in some material respect, the decision of

the respondent was affected by an erroneous view of the relevant statute.

However, he also held that as the development had lawfully commenced and

had progressed to a significant extent during a time when it was exempted

development, it would be unjust to preclude its completion as a single

integrated development because the station building had subsequently been

declared to be a protected structure.

Jackson & Anor v Stokes; McCarthy J [2008] IEHC 276

The plaintiff sought to recover an amount of approx €38,500 which it alleged

was due in respect of interest arising from the delayed completion of the sale

of a property. The sale closed on May 24, 2007, rather than the date in the

contract, April 2, 2007. The judge found that the agreed closing date was, in

fact, April 16, 2007. The contract contained the standard Law Society condition

40, which provides that if the sale has not completed by the agreed closing

date then either seller or purchaser can give notice requiring completion to take

place. This notice can only take effect if the serving party is able, ready and

willing to complete or, if not so able, ready and willing to complete, then only

by reason of the behaviour of the other party. Completion must take place

within 28 days of the notice and time is of the essence in this regard.

The judge found that as the 28 day notice had been served prior to April 16,

the notice was bad and of no relevance. He further held that the plaintiffs were

not able, ready and willing to close on April 16, nor on May 24, because they

could not provide appropriate release documentation in respect of four charges

registered on title, and that as there is no obligation to accept an undertaking

in the place of strict legal rights, the defendant’s failure to close was not due to

any fault on the defendant’s part and interest was not payable.

John Minihane ASCS MRICS

John is a partner, specialising in real estate, with

Mason Hayes+Curran.

SCSREVIEW 27

Government contracts

GCCC documents Q&A The Quantity Surveying Division Committee of the SCS recently established a Working Group to consider a number of problems being raised by members in relation to the new Government Forms of Contract. The following article outlines some of the queries raised by members and the answers presented represent the consensus of the opinions of this Working Group only. At this stage, the Government Forms of Contract have no precedent and only time and the courts will give definitive answers to problems arising. The following comments are not, in any way, to be construed as a legal opinion. The comments are made on the information provided in the question only, without any knowledge of the particular circumstances or other factors relating to the project and as such members must regard these comments in this light and proceed with due caution.

01 Where a project has been tendered on the basis of the New Form of

Contract (Minor Works), and the tenders are in excess of the allocated

budget, thereby requiring cost savings, is it possible to adjust the Contract

Sum post-Contract Stage by means of Change Orders in order to reduce

the project cost?

Furthermore, I note that Post-Tender Reductions are precluded under the

New Forms of Contract and contravene EU Procurement Laws; therefore,

this would prohibit pre-contract negotiations in order to achieve the

budget.

In summary, it is our opinion that you cannot issue a Change Order under the

Contract until you have signed a Contract, or at the earliest after the letter of

acceptance when the contract comes into existence; therefore, the Tender

Price cannot be adjusted but the Contract Sum can be adjusted later through

Change Orders.

Refer to page 93 of the ‘Guidance Note for Public Works Contract’ which

confirms that - “any change [to the tendered lump sum figure] would be

regarded as post tender negotiations, and would be in violation of the EU

procurement rules”. This note relates to the balancing and correction of errors

but the same principle would apply to negotiation of reductions.

Note also: the Department of Education design team procedures third edition

2007 section 5.4 Stage 3 Tender action and Award:

5.4 (c) If the tender price exceeds the approved pre-tender cost limits

the report shall provide a cost reconciliation indicating the cause of

the cost over-run and identifying any possible savings needed to bring

the cost within limit.

5.4 (d) It is noted that the Tender Sum is the Contract Sum and that

any proposed reductions or savings are treated as Clarifications to the

Contract (but forming part of the Contract Documents) and dealt with

by means of Change Orders.

It is clear that the intent to effect the reductions must be noted as a

clarification but that the actual reduction is effected after the contract is

effected by means of Change Orders issued by the ER.

One would presume that the advice would be to ensure that, prior to award of

the contract, the valuation of such proposed change orders be agreed with the

intended contractor, but there is clearly a problem under the interpretation of

EU Procurement Rules, where such reductions could involve new items with

new rates, or omission of items where on costs, preliminaries, etc., would

arise, which could not be easily identified from the pricing document and may

be construed as pre-contract negotiations and therefore prohibited.

The issue of the Change Order(s) would involve a valuation under the contract and a

possible claim for sums which might not have been covered in the notified savings

from the QS – a most unsatisfactory state of affairs but nevertheless the one implied

by the interpretation of the procurement rules issued by the GCC.

Care should also be taken to ensure that the suggested savings originate from the

designers; otherwise, the QS may be deemed to be a designer under the new H&S

regulations.

02 I am tendering for a project and Schedule Part 1, and 17k is marked NO for both

Delay Event and Compensation Event. My reading of Item 17 is that any errors

found in the BOQ pricing document, i.e., quantities, descriptions or items not

measured, if these are greater than €500.00, the main contractor will not get

compensated for any such error? Or is this only in relation to delays/extension of

time? If it is as per my first point then we as the main contractor will need to

check the BOQ document for any discrepancies, which is very onerous. I would like

your interpretation on this.

When this risk is transferred, the accuracy of the BOQ is at the sole risk of the

contractor and a contractor would be advised to check the BOQ. This is similar to the

position under the RIAI or GDLA blue forms of contract. We would note that

Department of Finance Training Manual para 5.6 states “The policy is to have design

developed so that ‘No’ can be inserted in this box“.

03 I am preparing tender documents and I have difficulty understanding the

differences in the options for the selection of Specialists. Referring to the “Capital

Works Management Framework, Guidance Note for Public Works Contracts, 14

September 2007: Paragraph 2.1.2” – 1. Specialist named by the Contractor,

Restricted procedures (page 39) and 4. Specialist named by the employer, appear

to be identical. Is there a difference in these procurement routes and documents

that need to be prepared?

2.1.2.1 - Specialist named by the Contractor, Restricted procedures – This refers to

the list of specialists that have been submitted by the prospective tenderer with his

main contract expression of interest, but this list is “restricted” by the employer

following a process of evaluation against the criteria for that area of specialisation.

This means that the list submitted by each prospective tenderer will have to be

assessed and each advised which, if any, of his specialists do not meet the minimum

criteria before tendering.

2.1.2.4 - Specialist named by the Employer – is the list of specialists following

advertisement and shortlisting by the employer without any input from the tenderers.

28 SCSREVIEW

Government contracts

Consultants need to be very clear and spell out in the request for expressions of

interest what route they are going to use. This may require different options for

different types of specialists within one tender.

04 Contract: Public Works Contract for Building Works Designed by the Employer. BQ:

Discrepancies between the BQ and the Works Requirement is NOT a compensation

event. The BQ was sent out as a paper copy with the tender. Some contractors

requested an electronic version, which was emailed to them. One of these

contractors has asked for our measurement sheets to be attached to the electronic

version so they can check our measurement. We do not want to give this

information but would like the opinion of the SCS on the rights of the contractor in

this situation.

It is generally considered good practice to make all documents used in the preparation

of a Bill of Quantities available for inspection, at the reasonable request of a tenderer.

It should be made clear in the instructions to tender, if this option is being made

available, that it is available to all tenderers on request.

05 VAT: Are tender amounts to include or exclude VAT?

Tender amounts should exclude VAT. The contract has been revised (August 1, 2008

edition) to state that the contract sum is exclusive of VAT – Article 3 and Clause 11.7

have likewise been amended.

06 Should Forms of Tender and Schedule 2 be returned as separate/stand-alone

documents (even though bound into instructions to tenderers at invitation stage)?

In order that a “Most Economical Advantageous Tender” comparison can be made, it is

necessary to examine the Form of Tender and Schedule 2 for all tenders. For the

purpose of this “MEAT” evaluation, the other components of the tender submission

are not required. The existing good practice of not opening the Bill of Quantities, and

any other tender documents, of the unsuccessful tenderers should be continued. It

would be logical, therefore, for the Form of Tender and the Schedule to be returned in

one envelope and the Bill of Quantities and all other documents in a second.

07 Should pricing documents returned by each contractor be opened?

No, as noted in Query No 06, the existing good practice of not opening these should

be continued. Once the tendering process has been completed and the successful

contractor appointed, all unopened documents should be returned to the tenderers.

08 I was wondering if you could help me re the new Government Form of Contract?

Under Part K of Schedule 1 of the minor works contract, can you confirm where I

can find the standard rates to determine the cost of plant (as of sub-clause

10.6.4[3]), e.g., IEI/CIF schedule of plant charges?

We are not aware of any independent published building plant list in Ireland. There is a

civil engineering list published in Britain, but how relevant this would be to building

projects in Ireland is uncertain. In the event that the employer fails to provide such a

schedule or specific methodology for calculating rates, there would be no agreed

methodology in the form of contract; however, the parties are at liberty to come to an

agreement as to how best the cost be calculated. The Competition Authority precludes

the use of a standard schedule of plant charges by industry (but not by Government)

and, as a result, no standard schedule exists in Ireland. You should request clarification

of this from the Employer or Employer’s representative.

09 Are there recommendations/guidelines in relation to when a pricing document (with

or without quantities) should or should not form part of the Works Requirements in

the contracts designed by the client?

There are no guidelines; however, it is our opinion that the pricing document should

not be included in the Works Requirements, on the assumption that the designers

have done their jobs correctly. There should be no necessity for it to be in the Works

Requirements as all design information will be in the specification or on the drawings.

It was never envisaged that the pricing document would be part of the Works

Requirements; indeed, in clause 1.3.1 the pricing document is subordinate to the

Works Requirements and therefore clearly not part of them.

If the pricing document is included in the Works Requirements and conflicts with the

other components of the Works Requirements, the contract would treat them with

equal importance, leading to obvious and unnecessary difficulty. If included, it would

create a scope of works, but clarity would need to be introduced as to the status of

such a document; it would need to be subordinate to the drawings and specifications.

However, the preliminaries should be in the Work Requirements but not as a pricing

document. The preliminaries will have no effect contractually unless they form part of

the specification/work requirements.

A FAQ section has been set up on the members section of the website

featuring all questions received to date along with the answers provided by

the working group. To view this section please log onto www.scs.ie, log into

the members section and you will find the frequently asked questions on the

government forms of contract under the QS section of the website.

SCSREVIEW 29

Insurance

Time is of the essence Recent case law highlights the need for early and detailed potential PI claim notification, writes KEVIN FINGLETON.

The issue of when to notify insurers of a potential claim under your

professional indemnity (PI) insurance policy constantly creates uncertainty for

firms which have arranged PI insurance to protect their business. A number of

decisions by the UK courts in recent months have focused attention on this

subject and highlight that the insured found out to their cost the implications

of failing to advise their insurers on time of claims circumstances.

The importance of timely notification cannot be over-emphasised as in many

cases failure to advise insurers promptly can result in coverage disputes and

potential declinature of coverage. Many insured parties who have to seek

indemnity cover fail to recognise their policy obligation to notify matters.

Failure to notify circumstances “likely to give rise to a claim” in a timely and

accurate fashion, continues to be a hurdle to overcome by many firms who

seek to have a claim paid under their PI policy.

A recent report by UK law firm CMS Cameron McKenna highlighted that early

notification “is vital from insurers perspective to have the opportunity to

exercise control over a matter at an early stage in order to minimise any

potential exposure and to enable the early setting of a reserve”.

Notification clauses in most PI policies are generally drafted as “conditions

precedent”, i.e., conditions which must be complied with for cover to operate.

Failure to comply entitles insurers to repudiate cover in the event of breach.

Recent cases

Two recent UK cases are worthy of note in highlighting notification obligations.

Kidsons v Lloyds Underwriters

The background to this case is that the policyholder made various

communications to its professional indemnity insurers relating to a potential

problem in advice they had provided relating to a tax scheme which was held

to be vague in so far as it did not outline comprehensive information as to

the likely impact of the alleged error. The insurers were successful in their

argument that the notifications were not effective and had not been notified

“as soon as practicable” as specified in the policy.

The Kidsons’ matter has been referred for appeal; however, initially, the High

Court ruled that a proper notification should contain information which is

“sufficiently clear and unambiguous that it leaves the reasonable recipient in

no reasonable doubt that the policy holder is notifying a circumstance under

the policy”.

The case has clarified that a notification should be as specific, clear and

precise as possible and should include all relevant information of which the

policy holder is aware.

There is often confusion as to what amounts to a “circumstance” and how

likely that a resulting real claim might develop. In the Kidsons’ matter, the

courts ruled that the claim notification simply needed to be at least a

“possibility” or with “real” prospects rather than false, fanciful or imaginary.

The ruling also set out an objective test that a notification should include at

the very least:

n notification to insurers with wording that leaves the reader in no doubt

that the purpose of the communication is to notify a circumstance that

may give rise to a claim;

n details of the victim or potential claimant;

n details of the error or act, omission or negligent or wrongful conduct that

the policy holder is alleged to have committed; and,

n details of the potential loss and, if possible, an indication of the quantum.

Kajima UK Ltd v The Underwriter Insurance Company Ltd (TUIC)

The case summary outlines that Kajima had been employed to design and

build a block of flats. Shortly after practical completion, ponding of water

occurred on the walkway balconies from the staircases to the front doors of

various flats. Kajima carried out investigations into the cause of the ponding

and concluded that it was due to excessive settlement which could distort

adjoining roofing and balconies. Kajima notified its insurers, TUIC, accordingly

in February 2001 and stated that further investigations were being carried

out to confirm the cause.

Kajima renewed their PI insurance with a different insurer in May 2002. In

July 2005, following further investigations and remedial works arising out of

issues relating to the settlement problems, Kajima was informed by engineers

that the wind loading calculations for the building had been badly

underestimated and that, as a result, lateral stability was a serious problem.

All of the tenants in the building were therefore evacuated, with the remedial

works estimated at £7.25 million.

Kajima attempted to claim on its original February 2001 notification to its PI

insurers for this amount. Kajima argued that the investigation referred to in

the February 2001 notification led in time to further investigations which

meant that in effect the losses, costs and liabilities incurred by Kajima

following the discovery of stability problems in July 2005 all arose from the

2001 notified circumstances.

30 SCSREVIEW

Insurance Classified

The court, however, disagreed holding that the notification was "only

effective in relation to the specific circumstances which were notified" in

2001. It was not enough that "there was a historical 'continuum' of

investigation by various parties which coincidentally revealed a number of

defects or deficiencies" which may or may not have had anything to do with

the notified circumstances.

More detail

These cases signify that a vague or partial preliminary notice will no longer be

acceptable to trigger policy notification provisions. More detailed information

will be required to ensure that policy conditions are met with ongoing

updates and communication to insurers on developments. In the

circumstances where the nature of the problem is genuinely unknown but a

potential larger situation is envisaged, best practice is to notify the “big

picture” worst case scenario and maintain communication throughout. Whilst

UK precedent is of course not binding on Irish court rulings, it is often used

and referred to as persuasive argument.

Recovery

The issue of notification obligations was also highlighted in two recent cases

involving insurance companies who sought recovery under their reinsurance:

Dornoch Ltd v Royal and Sun Alliance plc and AIG (Ireland) v Farraday

Capital Ltd.

Both cases were very similar – a policy holder notified a claim under their

directors’ and officers’ insurance. The two insurers failed to notify the matter

in time to their re-insurers under policy conditions which required “losses

which may give rise to a claim”, that are “known” to the insurers, to be

notified to re-insurers within a specific time period.

As can be seen here, even insurers can get it wrong – and they too run into

difficulty when they fail to notify in a timely fashion.

Report, report, report

The general advice has to be that notifications need to be timely. Some

policies require notification within a matter of days, whereas others require

notification “as soon as practicable.” Whilst “as soon as practicable” is the

preferred language, the lessons learned from these recent cases and the

majority of insurance disputes is that they could have possibly been avoided

if the policy holder:

n was more diligent in notifying their insurers; and,

n kept them informed.

A good risk management procedure in your practice is to abide by the mantra

“report, report, report” all matters of concern, as your PI insurers will not

generally penalise you for good reporting of potential circumstances which do

not develop.

CLASSIFIED SECTION NEW

CLASSIFIED ADVERTISING

A new initiative for the SCS Review is the introduction of classified

advertising. Lineage advertisements offering suitable positions in the

profession (four lines) will be FREE TO MEMBERS of the SCS.

Please send your advertisement by email to greynolds@scs.ie

Display advertisements of one sixth of a page (as below) will be

available at a cost of ¤200 (plus VAT) on the Classifieds Page through

pat@thinkmedia.ie

Flanagan & Associates Chartered Quantity Surveyors

SENIOR | INTERMEDIATE | JUNIOR

QUANTITY SURVEYORS

Due to continued expansion into the Middle East Flanagan & Associates

require candidates overseas and in Galway. Salary is negotiable depending

on experience.

Please forward your CV in confidence to info@faa.ie

for the attention of Sharon Lyons. www.faa.ie

Kevin Fingleton

Kevin is a Director of Marsh Ireland which specialises

in arranging PI insurance for SCS members.

Building Surveying Solutions are a young and dynamic Building

Surveying practice based in central Dublin. We are currently looking

to employ a recently qualified highly motivated CHARTERED BUILDING

SURVEYOR with excellent communications skills, a high standard of

presentation and an understanding of AutoCAD are essential. Knowledge of

specification writing, dilapidations and residential and commercial surveys

would be beneficial.

An outstanding training and career development route to

qualification is available with a young and dynamic Building

Surveying practice based in central Dublin. We currently are looking to

employ a highly motivated graduate BUILDING SURVEYOR. A willingness

to learn and a good understanding of AutoCAD are essential.

We are offering a competitive package with

excellent prospects to the right candidate.

For further information please contact

Sean Oragano; 01 884 7928 or 087 992 0906

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SCSREVIEW 31