What is an Engineer to the Contract – and do you need one?

What is an Engineer to the Contract – and do you need one?

, Simon O'Brien

What is an Engineer to the Contract (ETTC)?

Regional Director Simon O’Brien writes, the role of the Engineer to the Contract is an interesting one; under clause 6.2.1 of the NZS3910:2013 Contract, the Engineer has a dual role:

a) To act ‘as expert advisor to and representative of the Principal, giving directions to the Contractor on behalf of the Principal’

b) To act ‘independently of either contracting party, to fairly and impartially make the decisions entrusted to him or her under the Contract, to value the work, and to issue certificates.’

The ETTC is always wearing one of these two hats, and although our overarching duty is to act in good faith; for some it can be difficult to differentiate between these two roles.

For example, as ETTC we must act in the best interest of the Principal (the person, or corporate entity, who engages the other parties) by providing expert advice. However, we must also act fairly and impartially when assessing the value of the Contractor’s payment claims or the merits of an extension of time being claimed by the Contractor.

As ETTC we are usually acting in a quasi-judicial role, so although we are not subject to a legal Act, we are required to act fairly and impartially to both parties. We are not compelled to give reasons for our decisions, however, I find that in all cases it is advisable and sensible to do so. Firstly, to ensure common communication between all parties and secondly, to provide clarity over how as Engineer we have used our own professional knowledge, reasoning and skill in forming our judgement.

Background

For 10 years NZS 3910:2003 was the form of construction contract most commonly used in New Zealand. Following industry feedback and lessons learnt, NZS 3910:2003 was split into three separate standards:

- NZS 3917:2013 focuses on Fixed Term Contracts

- NZS 3916:2013 on Design and Construct Contracts

- NZS 3910:2013 provides more tailored conditions for Construction Contracts

The new standards are set out to be easier to follow and contain standardised forms of documents (such as the tick-box type Special Conditions of Contract in Schedule 1 and Practical Completion Certificate in Schedule 15).

So, is an Engineer to the Contract Required?

Most Principals need assistance with their Contract, particularly when considering the procurement arrangements; use of Special Conditions and the actual implementation of the Contract. Although I would always recommend that the Principal seeks legal advice when amending a Contract, the ETTC can be invaluable in assisting with the compilation of the documents required, and the administration of the Contract during the construction period.

I believe the ETTC is a very important role that is often undersold or completely misunderstood. Too often we find that clients don’t understand the intricate issues that a Contract can reveal - particularly when a dispute arises. As the ETTC, we can provide the advice needed by the Principal to make informed decisions on their construction projects.

There will be occasion when an Engineer is not required, for instance where the Principal has good contract administration experience, or where the works are not complex or are of low duration or complexity. However, in most cases the Principal’s lack of expertise to administer their own Contract will necessitate an ETTC being appointed.

Who can act as Engineer to the Contract or Engineer’s Representative?

The ETTC must be suitably qualified and a natural person (an individual human being, not a company or firm). Where relevant, we also appoint an Engineer’s Representative (Rep) to assist the ETTC with day to day tasks. They too must be a natural person. There are items that the Rep cannot undertake including: reviewing dispute matters; valuing Variations; granting extensions of time etc. (these are further detailed in clause 6.3.3).

At Hampton Jones we see the Engineer’s Representative as a great training opportunity for some of our younger and less experienced team members to be mentored and up-skilled in this area. Our highly skilled ETTC’s oversee all work and take them through the aspects of the project that they are unfamiliar with.

I hear far too many times that others engaged as ETTC are either unsuitably qualified or have put incorrectly trained people onto the project and act in an adversarial way. This is where a lack of understanding and experience in the role has likely led to a conflict and the ETTC or Rep is no longer acting fairly, reasonably or impartially.

What happens if the Engineer’s decision is disputed?

There will be occasion on some projects where a dispute arises, clause 13 provides mechanisms for dispute resolution. Disputes between the Contractor and Principal can be referred to the ETTC for an Engineer’s Determination under clause 13.2. This is the first step to working to resolving the dispute amicably.

For example, when assessing an extension of time claim, the Engineer should be liaising with the Principal throughout the course of their assessment, however, they should not be unduly led by the Principal’s account of the situation and should ensure that equal opportunity is given to the Contractor to provide their own account of the claim and the potential mitigating circumstances that have led to it. Once the Engineer has thoroughly assessed the matter, they can then grant or decline the extension.

I personally find it helpful for both parties, for the Engineer to provide a succinct overview of the reasons that have led to the decision. If either party to the Contract wishes to dispute the Engineer’s findings, there are clear pathways set out in Clause 13 of the Contract for alternative dispute resolutions.

How can Hampton Jones help?

Over the last 5 years our team members have acted as Engineer to the Contract (ETTC) on more than 65 Housing New Zealand projects nationally and this doesn’t include the work we do for other clients in this role.

Our teams’ ETTC experience ensures that you have a knowledgeable professional overseeing all aspects of the project, along with an Engineer’s Representative who can assist the Engineer in the day to day administration of the Contract. This provides the Principal with a cost effective solution with the peace of mind that they are getting the best service available.

In the ETTC role, we provide our clients with logical advice and guidance to ensure that every party involved is working towards producing a better building. We are always happy to discuss how Hampton Jones can assist in this role on your next project.