What's new

Mace says faulty wiring behind Spurs stadium delay

davidmatzdorf

Front Page Gadfly
Jun 7, 2004
18,106
45,030
Sorry I may have missed. Has there been anything official disclosure wise regarding penalties for delay ??

Last I read it was suggested that Mace were unlikely to have had a penalty clause include in the build contract, but that seemed to just be opinion.

Just wondered whether there has been anything concrete one way or the other.

Not that it's going to change anything, just intrigued to know what kind of sums we'd be looking at if applicable.

Penalties are illegal in building contracts. They have to be liquidated damages: a fair pre-assessment of how much the client will lose financially as a result of late completion. As you can imagine, on a project of this size, that's a lot of money. But it can't be a penalty, i.e., penal in nature or quantum. It has to be related to the additional costs of late completion.

We know that Mace have financial incentives for completing the project early, because it was publicised when they took on the job. Because of the short time scale for the build, there may even have been incentives to complete it on time. Normally, one would expect there also to be damages for late completion. I've never encountered a building contract without them. Whichever it is, or both, Mace will lose a lot of money as a result of these last-minute problems.

It won't end there. Mace will try to pass the losses on to the subcontractor at fault. If the problems resulted from defective materials, the subcontractor will try to pass the losses on to the manufacturer/supplier. And everyone will involve insurers. Most disputes of this nature, if they are as valuable and complex as this, end up in litigation.

In the meantime, THFC can sit on the money and refuse to release retention (the 2%-5% of a contract that is held back until defects have been rectified). But Mace and the other contractors will threaten to sue for the release of the retention.

Everyone's lawyers will end up with most of the money.
 

cider spurs

Well-Known Member
Jul 5, 2016
9,399
23,731
Penalties are illegal in building contracts. They have to be liquidated damages: a fair pre-assessment of how much the client will lose financially as a result of late completion. As you can imagine, on a project of this size, that's a lot of money. But it can't be a penalty, i.e., penal in nature or quantum. It has to be related to the additional costs of late completion.

We know that Mace have financial incentives for completing the project early, because it was publicised when they took on the job. Because of the short time scale for the build, there may even have been incentives to complete it on time. Normally, one would expect there also to be damages for late completion. I've never encountered a building contract without them. Whichever it is, or both, Mace will lose a lot of money as a result of these last-minute problems.

It won't end there. Mace will try to pass the losses on to the subcontractor at fault. If the problems resulted from defective materials, the subcontractor will try to pass the losses on to the manufacturer/supplier. And everyone will involve insurers. Most disputes of this nature, if they are as valuable and complex as this, end up in litigation.

In the meantime, THFC can sit on the money and refuse to release retention (the 2%-5% of a contract that is held back until defects have been rectified). But Mace and the other contractors will threaten to sue for the release of the retention.

Everyone's lawyers will end up with most of the money.


Thanks for the reply, and covered another question which was going to be about chasing the subcontractor for the money.

I'm thinking that revenue wise this delay has cost the club millions ?

Are these subcontractors likely to be able to repay the financial loss, is this insurance based ??

Same for manufacturers. Could easily be a small time company turning out wiring but at a very reasonable cost (example). Would we bankrupt them going for money....if hypothetically wiring was the issue.

...and finally, surely Mace have to be held accountable to a degree whether sub contractor fault or not.

Main contractor should be overseeing all works no ??
 

Paolo10

Well-Known Member
Apr 6, 2004
6,179
7,621
Hopefully the pitch wiring has been correctly installed...can imagine the pitch not rolling out properly...are there any other pitches with that technology btw?

Wondering if there have been any documented issues...I seem to recall a pitch that rolled into the stadium in Japan/Korea at one of the World Cups perhaps?
 

King Yid

Well-Known Member
Jan 3, 2011
267
594
It's too early to tell, really, and it will be the subject of much dispute, spin and blame. But my cards would be on the subcontractor who had overall responsibility for the fire safety system. They may or may not have farmed out the defective wiring to another electrical subcontractor, but even so, it was their responsibility to deliver a fit-for-purpose fire alarm system to a timetable.

If I understand the construction-management contractual arrangements correctly, THFC will claim against Mace, who in turn will claim against the subcontractor, who will try to claim against anyone to whom they sub-subcontracted the defective elements of the work (if they did). Eventually, the buck will stop and someone will either make a humungous claim on their negligence insurance or go bust.





If this is so (and it sounds plausible), I wonder if the defect here was in the trunking - the casing to keep the wiring protected. If it was installed and tested 18 months ago and has failed now, it's hard to see a way for the wiring itself to have failed spontaneously between then and now, but it's easy to see how the trunking, much of which has been exposed to the elements through most of those 18 months, could have been incorrectly specified (not weatherproof) or badly installed (leaks), which in turn damaged the wiring.

It's just an educated guess, no inside info.

We don’t test the containment that houses the cables. Containment takes many forms; trunking which has a lid on it, cable basket and cable tray etc. General containment tends not to be water proof or necessarily provide ingress of dust or particles unless you want an ‘IP’ rated enclosure. Containment is there to provide support and mechanical protection to cables and in some cases, separation of one type of cabling/system from another to prevent electrical interference.

In the case of the Stadium delay, we will have failed to obtain Building Control sign-off. In order to achieve this certain ‘life safety systems’ must be complete, commissioned and witnessed as being complete and effective. These systems are varied and can include Fire Alarm, Security, Smoke Ventilation, Sprinkler Systems, Red Care lines being in place etc.

If faulty wiring is the cause this would not have become apparent at the point of commissioning the systems but much earlier in the installation. Once the cables gave been installed, they are ‘belled out’ to ensure that the right cable is terminated in the location within the Control Panel, Enclosure, DB etc. The cables are also resistance tested prior to energisation. It is at this point that the installer would become aware of potential damage to the cable if he measures an excessive amount of resistance. A physical check of the cable and terminations are then carried out.

Only once the cables are tested and ‘passed’ are they energised. In the case of say, a Fire Alarm system, the system is then commissioned followed by the ‘Cause and Effect’ phase during which you validate that the system behaves as intended i.e. a Fire Alarm going off in one zone should result in the Lifts in that zone going to Ground Floor, AHUs providing ventilation in that zone disabling to prevent the potential supply of oxygen to a fire etc.

The point I’m making is this;

If faulty cables are the cause then it means they are much further behind in the installation than they are letting on, or

The cables have been damaged at some point between testing and commissioning i.e. sabotage. This would be unlikely given the scale and complexity of a system such as the Fire Alarm cabling and its highly unlilkley that a non-specialist is going to know how to do this effectively.

The simple fact of the matter is as many people above have already stated - complex projects overrun. I’ve built Stadia, large Hospitals and large Schools and the only certainty is that they overrun programme. I work on projects now, including recently a large redevelopment of an iconic building in West London, that are compete within 18 months, that 5 years ago would’ve taken 30 months and 10 years ago 3 years.

Clients are partly to blame as they want their assets sooner (don’t blame them for that). Main Contactors don’t really have much choice but to accept these conditions - if they were to say “sorry, this will take 2 years rather than 18 months to build right”, that Client will simply find someone who will agree to build it within 18 months.

A lot of Clients forget the vast number of trades that require coordinating in order to properly programme a project. It only takes one failed delivery, one clash between pipe work and ductwork, or an accident on site to bring work to a halt in that part of a project until the problem is resolved.

We used to have plenty of ‘float’ within our programmes to allow for these type of problemsn now we don’t have that luxury anymore unfortunately.


Ps. That’s not a rant at you personally, however I’ve heard snippets from within the industry and could tell from the pictures that have been released over the months that the Stadium would not be ready. It would have been nice if the Club had better informed the Fans, but Levy has had to wait until the last minute to try and protect the contractual relationship with the NFL - the tone of the Club’s statement thanking the NFL for their patience is testament to that.

Anywho, here’s hoping for three points on Monday night #COYS
 

King Yid

Well-Known Member
Jan 3, 2011
267
594
Penalties are illegal in building contracts. They have to be liquidated damages: a fair pre-assessment of how much the client will lose financially as a result of late completion. As you can imagine, on a project of this size, that's a lot of money. But it can't be a penalty, i.e., penal in nature or quantum. It has to be related to the additional costs of late completion.

We know that Mace have financial incentives for completing the project early, because it was publicised when they took on the job. Because of the short time scale for the build, there may even have been incentives to complete it on time. Normally, one would expect there also to be damages for late completion. I've never encountered a building contract without them. Whichever it is, or both, Mace will lose a lot of money as a result of these last-minute problems.

It won't end there. Mace will try to pass the losses on to the subcontractor at fault. If the problems resulted from defective materials, the subcontractor will try to pass the losses on to the manufacturer/supplier. And everyone will involve insurers. Most disputes of this nature, if they are as valuable and complex as this, end up in litigation.

In the meantime, THFC can sit on the money and refuse to release retention (the 2%-5% of a contract that is held back until defects have been rectified). But Mace and the other contractors will threaten to sue for the release of the retention.

Everyone's lawyers will end up with most of the money.
I think LADs are set out and determined within the contract at the outset. This is certainly the case with PFI projects. This is different from a general claim for damages which have to be valued on a case by case basis.

I was under the impression that Mace are the Management Contractor and not in a Main Contractor role. All the Trade Contractors are in contract directly with THFC and not with Mace which isnt unheard of. Clients, wrongly in my view, believe that this spreads the risk. I’m this instance, retention is unlikely to be within Mace’s agreement with THFC and quite possibly not within the agreements with the Trade Contractors.

The Trade Contractors will still be bound by their One Year Defects Liability period, which is effectively their warranty to the Client, but will also likely be bound by a separate “Latent Defects” period which can run for several years - again the case of a recent PFI project I worked on, the latent defects period lasts for 14 years!!
 

Johnny J

Not the Kiwi you need but the one you deserve
Aug 18, 2012
18,124
47,910
Penalties are illegal in building contracts. They have to be liquidated damages: a fair pre-assessment of how much the client will lose financially as a result of late completion. As you can imagine, on a project of this size, that's a lot of money. But it can't be a penalty, i.e., penal in nature or quantum. It has to be related to the additional costs of late completion.

We know that Mace have financial incentives for completing the project early, because it was publicised when they took on the job. Because of the short time scale for the build, there may even have been incentives to complete it on time. Normally, one would expect there also to be damages for late completion. I've never encountered a building contract without them. Whichever it is, or both, Mace will lose a lot of money as a result of these last-minute problems.

It won't end there. Mace will try to pass the losses on to the subcontractor at fault. If the problems resulted from defective materials, the subcontractor will try to pass the losses on to the manufacturer/supplier. And everyone will involve insurers. Most disputes of this nature, if they are as valuable and complex as this, end up in litigation.

In the meantime, THFC can sit on the money and refuse to release retention (the 2%-5% of a contract that is held back until defects have been rectified). But Mace and the other contractors will threaten to sue for the release of the retention.

Everyone's lawyers will end up with most of the money.
Fairly sure they aren't illegal but unenforceable (or void an initio, in some precedents).
 

davidmatzdorf

Front Page Gadfly
Jun 7, 2004
18,106
45,030
I think LADs are set out and determined within the contract at the outset.

Always. Case law dictates that they must be a fair pre-assessment of the Employer's losses. They cannot be revisited after the contract has been signed.

I was under the impression that Mace are the Management Contractor and not in a Main Contractor role. All the Trade Contractors are in contract directly with THFC and not with Mace which isnt unheard of. Clients, wrongly in my view, believe that this spreads the risk. I’m this instance, retention is unlikely to be within Mace’s agreement with THFC and quite possibly not within the agreements with the Trade Contractors.

Yes, it's a construction-management contract and Mace are the construction managers. I agree with you about risk-shedding, but then I'm mega-old-school! I gradually stopped doing direct project management because I didn't like the Design & Build contracts that my employers and clients (mainly housing associations) insisted upon, because they wrongly thought they were shedding risk. They weren't. They were just reducing the quality of the end product and creating excuses for sloppy project management.

Nowadays a fair amount of my consulting work is sorting out the long-term fuck-ups that were caused by that strategy. Not just latent defects, but defective planning agreements, incompetently-drafted leases, land ownership (trespass) errors and road adoption failures. None of those issues were common when we used traditional procurement, with a knowledgeable project manager and an architect, appointed by the Employer, at whose desk the buck stopped.

I set a premium on quality design, so I still use traditional procurement, with an architect at the head of the team and a main contractor to take responsibility on site. If you invest the time and attention to detail into project management, traditional procurement is no more risk-laden that D&B or construction management. It's a lot of work, but so is anything when you care about quality.

I'd be surprised if there is no monetary retention. Alarmed, in fact. Not that it works as an incentive to rectify defects, but it functions as leverage for all manner of other contractual cock-ups.

The Trade Contractors will still be bound by their One Year Defects Liability period, which is effectively their warranty to the Client, but will also likely be bound by a separate “Latent Defects” period which can run for several years - again the case of a recent PFI project I worked on, the latent defects period lasts for 14 years!!

I'm surprised a latent defects period of 14 years hasn't been struck down as an unfair contract clause. With the number of bankruptcies in construction, surely any latent defects clause >1 year has to be backed up with a bond. Is that what you have found?

Normally, in residential construction, you get an NHBC or Premier or similar building guarantee to cover latent defects. They're not much more use than bog roll, but Mortgagees insist upon them - they're a bit of a scam.
 

Sweetsman

Well-Known Member
Jan 30, 2011
6,673
6,588
Always. Case law dictates that they must be a fair pre-assessment of the Employer's losses. They cannot be revisited after the contract has been signed.



Yes, it's a construction-management contract and Mace are the construction managers. I agree with you about risk-shedding, but then I'm mega-old-school! I gradually stopped doing direct project management because I didn't like the Design & Build contracts that my employers and clients (mainly housing associations) insisted upon, because they wrongly thought they were shedding risk. They weren't. They were just reducing the quality of the end product and creating excuses for sloppy project management.

Nowadays a fair amount of my consulting work is sorting out the long-term fuck-ups that were caused by that strategy. Not just latent defects, but defective planning agreements, incompetently-drafted leases, land ownership (trespass) errors and road adoption failures. None of those issues were common when we used traditional procurement, with a knowledgeable project manager and an architect, appointed by the Employer, at whose desk the buck stopped.

I set a premium on quality design, so I still use traditional procurement, with an architect at the head of the team and a main contractor to take responsibility on site. If you invest the time and attention to detail into project management, traditional procurement is no more risk-laden that D&B or construction management. It's a lot of work, but so is anything when you care about quality.

I'd be surprised if there is no monetary retention. Alarmed, in fact. Not that it works as an incentive to rectify defects, but it functions as leverage for all manner of other contractual cock-ups.



I'm surprised a latent defects period of 14 years hasn't been struck down as an unfair contract clause. With the number of bankruptcies in construction, surely any latent defects clause >1 year has to be backed up with a bond. Is that what you have found?

Normally, in residential construction, you get an NHBC or Premier or similar building guarantee to cover latent defects. They're not much more use than bog roll, but Mortgagees insist upon them - they're a bit of a scam.
This is like watching two Jedi masters duking it out.
 

King Yid

Well-Known Member
Jan 3, 2011
267
594
Always. Case law dictates that they must be a fair pre-assessment of the Employer's losses. They cannot be revisited after the contract has been signed.



Yes, it's a construction-management contract and Mace are the construction managers. I agree with you about risk-shedding, but then I'm mega-old-school! I gradually stopped doing direct project management because I didn't like the Design & Build contracts that my employers and clients (mainly housing associations) insisted upon, because they wrongly thought they were shedding risk. They weren't. They were just reducing the quality of the end product and creating excuses for sloppy project management.

Nowadays a fair amount of my consulting work is sorting out the long-term fuck-ups that were caused by that strategy. Not just latent defects, but defective planning agreements, incompetently-drafted leases, land ownership (trespass) errors and road adoption failures. None of those issues were common when we used traditional procurement, with a knowledgeable project manager and an architect, appointed by the Employer, at whose desk the buck stopped.

I set a premium on quality design, so I still use traditional procurement, with an architect at the head of the team and a main contractor to take responsibility on site. If you invest the time and attention to detail into project management, traditional procurement is no more risk-laden that D&B or construction management. It's a lot of work, but so is anything when you care about quality.

I'd be surprised if there is no monetary retention. Alarmed, in fact. Not that it works as an incentive to rectify defects, but it functions as leverage for all manner of other contractual cock-ups.



I'm surprised a latent defects period of 14 years hasn't been struck down as an unfair contract clause. With the number of bankruptcies in construction, surely any latent defects clause >1 year has to be backed up with a bond. Is that what you have found?

Normally, in residential construction, you get an NHBC or Premier or similar building guarantee to cover latent defects. They're not much more use than bog roll, but Mortgagees insist upon them - they're a bit of a scam.
I don’t think a preference for traditional procurement makes you old school! I’m in my mid-30’s and caught the fag-end of TCs when I started in the industry before D&B became the norm. I could see back then the benefits of a completed design far outweighed the benefits of a reduced project period on terms of quality of the final asset. It essentially comes down to the good old fashioned time/cost/quality triangle, regardless whether your in housing or the commercial side of construction.

Regarding retention, or lack there of, there is pressure from certain quarters within the industry for retention to be scrapped or at least be paid into a Project Account/held in escrow. This is mainly due to larger Contractors, typically the Tier 1’s, unlawfully withholding retention. This tends not to be a big issue for the larger M&E Contractors and the like, but does pose a big problem for some of the smaller ones and artisan trades who rely on this as part of their cash flow.

The 14 year Latent Defects was specific to the PFI project that I was referencing. Latent Defects, as far as my understanding goes, doesn’t cover your traditional warranty items such as breakdowns that would be covered under the normal DLP. The Latent Defects Period runs parallel and covers things such as contractual obligations not met, poor workmanship that is demonstrably not good industry practise that may not manifest for a number of years, or statutory obligations, such as HTMs, not complied with.

Given that the concession period for a typical PFI asset once handed over to the SPV can be between 20 and 30 years before its then handed over to the User (in this case, an NHS Trust), the SPV will want to keep the Contractor on the hook for as long as it can. As to whether they are enforcible as a clause, large contractors know what they’re getting into with PFIs and turning down large projects that add between £100-250m at a time to your order book when you’re telling your share holders you’re gonna be doing anywhere between £2-4bn revenue per year won’t be looked upon favourably! This brings me onto another pet gripe of mine - construction companies that focus too much on revenue and not enough on margin - but that’s for another time!!

As with regards to a bond, Tier 1 Contractors tend to deal in terms of Parent Company Guarantees. The types of Contractor who will be on a PFI framework or capable of executing large projects such as New WHL (think Carillion, Balfour Beatty etc, although Carillion is a bad example!!) are usually too big for one single Project gone bad to send them to the wall. Balfour Beatty, for example, typically hold cash reserves in the region of at least £100m and hold investment and property portfolios in the £billions that are easily disposed of if liquidity is required at short notice.

If a subsidiary of a large infrastructure group, such as Balfour Beatty or Carillion we’re to close its doors for example, collateral warranties would kick in so any ongoing obligations and liability periods would default to the Parent Company.
 
Last edited:

mawspurs

Staff
Jun 29, 2003
35,069
17,740
Its great for us to have two SC'rs so knowledgeable on the subject when we have the stadium build in progress. It explains a lot to the rest of us who would otherwise be in the dark and fed BS by the media.
 

Ionman34

SC Supporter
Jun 1, 2011
7,182
16,793
I don’t know how you can believe what the Club say when there’s blokes on the Internet with another view. My mate who lives in Wood Green knows someone who reads the Daily Mail and he said in 1997 that Levy had this season ticket scam in place so he could get VIP tickets to a Jay Z gig. Now you can take that with a pinch of salt, a drizzle of extra virgin olive oil and a hint of rosemary but it’s lunch time soon and I’m hungry.
Mate...
 

Ionman34

SC Supporter
Jun 1, 2011
7,182
16,793
It's too early to tell, really, and it will be the subject of much dispute, spin and blame. But my cards would be on the subcontractor who had overall responsibility for the fire safety system. They may or may not have farmed out the defective wiring to another electrical subcontractor, but even so, it was their responsibility to deliver a fit-for-purpose fire alarm system to a timetable.

If I understand the construction-management contractual arrangements correctly, THFC will claim against Mace, who in turn will claim against the subcontractor, who will try to claim against anyone to whom they sub-subcontracted the defective elements of the work (if they did). Eventually, the buck will stop and someone will either make a humungous claim on their negligence insurance or go bust.





If this is so (and it sounds plausible), I wonder if the defect here was in the trunking - the casing to keep the wiring protected. If it was installed and tested 18 months ago and has failed now, it's hard to see a way for the wiring itself to have failed spontaneously between then and now, but it's easy to see how the trunking, much of which has been exposed to the elements through most of those 18 months, could have been incorrectly specified (not weatherproof) or badly installed (leaks), which in turn damaged the wiring.

It's just an educated guess, no inside info.
Can THFC claim though David? Surely it will depend on whether the Clause 31 programme (if they’re using NEC) PC date has been exceeded. If the opening date was incentivised, then THFC don’t have a claim, Mace just lose the incentive payment, there won’t be any damages, liquidated or not, against missing that date.
However, if THFC ordered acceleration, and Mace priced it, then they may well have a claim if the PC date was missed.

Of course, the opening date may well be the PC date, in which case THFC can enforce any LD’s that are in the contract, which Mace will then contracharge to the subby.

All of which means the Claims QS’s will make a fortune in charges whilst they put together all the claim evidence.

I’ll be willing to bet that any LD’s are huge, considering the lost revenue from every home game missed. That’s how Multiplex nearly went under after the Wembley fiasco. LD’s murdered them. They went from a Tier 1 international player to a Tier 2 Contractor in Oz almost overnight!
 

Ionman34

SC Supporter
Jun 1, 2011
7,182
16,793
Sorry I may have missed. Has there been anything official disclosure wise regarding penalties for delay ??

Last I read it was suggested that Mace were unlikely to have had a penalty clause include in the build contract, but that seemed to just be opinion.

Just wondered whether there has been anything concrete one way or the other.

Not that it's going to change anything, just intrigued to know what kind of sums we'd be looking at if applicable.
Penalties are actually illegal.

I very much doubt that there are no damages listed in the contract, DL is not that naive.
 

Ionman34

SC Supporter
Jun 1, 2011
7,182
16,793
I think LADs are set out and determined within the contract at the outset. This is certainly the case with PFI projects. This is different from a general claim for damages which have to be valued on a case by case basis.

I was under the impression that Mace are the Management Contractor and not in a Main Contractor role. All the Trade Contractors are in contract directly with THFC and not with Mace which isnt unheard of. Clients, wrongly in my view, believe that this spreads the risk. I’m this instance, retention is unlikely to be within Mace’s agreement with THFC and quite possibly not within the agreements with the Trade Contractors.

The Trade Contractors will still be bound by their One Year Defects Liability period, which is effectively their warranty to the Client, but will also likely be bound by a separate “Latent Defects” period which can run for several years - again the case of a recent PFI project I worked on, the latent defects period lasts for 14 years!!
Mace will be the Principal Contractor and will be responsible to THFC, as the Client, for programme delivery. As such, it is highly likely that there will be LD’s within the contract.
 

King Yid

Well-Known Member
Jan 3, 2011
267
594
Mace will be the Principal Contractor and will be responsible to THFC, as the Client, for programme delivery. As such, it is highly likely that there will be LD’s within the contract.
I wouldn’t be surprised if there were LD’s but with Mace in the capacity of a Construction Manager and the Trade Contractors being in direct Contract with THFC, I don’t think Mace will be contra-charged and have to seek recovery from the at fault Contractor? THFC would claim damages via the mechanisms set out within the respective Trade Contracts, with substantiation provided by Mace and possibly the Cost Consultant too.

Mace would only have damages raised against them if THFC could prove that the delay(s) were as a result of Mace action/inaction, and in all likelihood, damages would have to have been raised against the Trade Contractor(s) in the first instance and the claim successfully defended by the Trade Contractor(s) in order to provide the substantiation that Mace were at fault.
 
Top