When the Customer Takes Over a Project: Understanding CDM Responsibilities and Contractor Risks

When the Customer Takes Over a Project: Understanding CDM Responsibilities and Contractor Risks

When the customer takes over a project, responsibilities under CDM 2015, contractual obligations and insurance liabilities can change significantly, creating risks that many contractors fail to recognise until problems arise.

As a consultant, it is becoming increasingly common to learn of projects that become complicated by the customer taking over the running of a scheme by removing the designer from the agreed contract hierarchy for whatever reason. While this may appear a simple change in project management, it can had significant implications for CDM responsibilities, contractual liabilities and insurance cover.

Under the Construction (Design Management) Regulations project plan agreement, it is standard practice for the designer of a landscape scheme to take over all legal responsibilities for the design, once commissioned by the customer as the Principal Designer. Designers retain their own duties under CDM. (The Principal Designer co-ordinates and manages the pre-construction phase, but does not absorb every designer’s responsibility, as some will fall under any specification supplied by the contractor)

Once commissioned, a contractor takes on the role and duties of The Principal Contractor under the CDM Regulations with the customer taking a back seat during working operations.

Once a customer decides to dispense with the services of the designer, it is standard practice for the Principal Contractor to be offered the opportunity to take over the responsibilities as Principal Designer, and be formally recorded as such in the CDM Plan file, usually following the issuing of a fresh contract to recognise and agree compensation for those additional responsibilities. However, the customer may wish to assume duties themselves, and is this scope of duties that need to be assessed and agreed.

There is another scenario that has come to light in the last couple of years; when the customer decides to dispense with the designer, and take over their role, instructing, supervising and organising the project in the stead of the designer.

The Customer Becomes the Designer

The Law allows the customer to take over the role of Principal Designer as well as client. They will own the project, fund the budget and define the scope of the works. They hold the highest position in the hierarchy of a project.

They have the power to hire, fire and direct how the project progresses under the rules of Health & Safety Executive. Importantly, they are likely to be deemed to have the necessary skills and knowledge of the role.

They must obey the exact same safety regulations as any commercial landscaping company, including producing written method statements and risk assessments under their own name. They are legally obliged to produce construction phase plans, manage site risks under their own name, and ensure welfare facilities are present.

If anything goes wrong, the customer cannot use their status as the property owner to excuse safety failures.

It is essential to examine the allocation of design responsibility, and revise your insurance cover to cope with the change of indemnities and cost implications.

For this reason alone, you should ensure that your Terms & Conditions allow for this situation, and be prepared for it to happen.

If the Designer or Project Overseer leaves the project, and the customer takes over, you need to arrange a fresh contract before continuing work. It may be advisable to check with your solicitor, even on a modest project if you are concerned regarding your status.

Protect Yourself

A simple Variation Order will not prove sufficient in the event of this scenario. According to circumstances, it may warrant closing the site until the correct documentation is in place. The word and command of the customer is insufficient to protect you in case of a dispute, accident or potential for conflicts of interest without a formal written agreement.

It is worthwhile having your standard terms checked to ensure that you are ready to react in case this scenario presents itself during works progress.

(Most customers will be unaware of the heavy responsibilities they are proposing to take on, and will change their minds once informed).

This article is prompted by two particular cases, both involving the removal of the designer, and the customer taking control of the project. All was fine, until nearing the end of the job, when every element that had been undertaken and completed before the customer took over was challenged and inspected, even though the work had been signed off previously by the designer, and paid for. In both cases, the customer sued the contractor for breach of contract brought about by the changes in unwritten responsibilities.

This article is advisory only, reflecting personal experience, and should be used for information and as a warning should the occasion arise, as every case is different.