Project Managers' Duties and Fee Disputes

The number of claims for professional negligence brought against project managers has soared in the last few years, to the extent that the prospect of a negligence action is now a real risk for project managers. Clients who feel that they have been let down want redress, and so the past decade has seen the growth of a considerable body of case law, elaborating further the law governing project managers’ responsibilities.

Members of Chambers work in this area is well established. One of Chambers’ current QCs appeared as counsel in the first reported case on negligence by a project manager: Chesham Properties v Bucknall Austin [1996] 82 BLR 92, in which it was established that project managers are under a duty to warn the client of poor performance by members of the project team.

Since then, our members have been involved in a significant number of cases and thus in developing the law. One such case, Royal Brompton Hospital NHS Trust v Hammond [2001] 76 Con LR 148, concerned one of the most high-profile negligence claims arising from a major construction project. It was alleged that project managers had been negligent in failing to monitor decisions by the architect to grant extensions of time to the contractor. Actions were also brought against the architects and other members of the project team. The Technology and Construction Court decided that the case against the project managers was based upon a fundamental misconception as to the scope of their duties; the project managers’ task was to ensure that the contract administration decisions were undertaken efficiently, not that they were all correct, since this would virtually oblige the project managers to undertake everyone else’s work. Teams from Keating Chambers defended both the project managers and the architects in this case.

Management of construction projects has also featured strongly in more recent case law. Great Eastern Hotel Co. Ltd v John Laing Co. Ltd [2005] 99 Con LR 45, thought to be the first reported case on breach of obligations under a construction management contract, saw the client – represented by leading counsel from Chambers - successfully sue its construction manager in respect of failure of co-ordination of the individually-made contract packages.

The Channel Tunnel Rail Link case of Costain Ltd v Bechtel [2005] TCLR 6 highlighted the contentious issue of impartiality in contract administration. Following a meeting with the project managers, the contract administrators increased disallowance of contractors’ claims. The contractors’ alleged improper interference causing the client to breach the contract, but the project managers argued that, under the (amended) NEC contract, there was no duty of impartiality on the project managers. On the facts, the contractors were not awarded injunctions, since damages would be an adequate remedy in any event. Costain v Bechtel was argued by counsel from Keating Chambers, as was the most recent consideration of independence in contract administration: Scheldebouw v St James Homes [2006] BLR 113, where the Technology and Construction Court held that clients could not substitute themselves for their construction managers in the administration of trade contracts, as this would be inconsistent with a decision-maker’s obligation of impartiality and fairness.

In recognition of their expertise in the field, members of Chambers are often invited to speak on this and related subjects. In February 2005, for example, one of Chambers’ silks gave a presentation on ‘Project Team Negligence’ to a national law firm, which was relayed by video link to all their regional offices.

Further Information
For further information on how our members can assist you, please contact the Senior Clerks, John Munton and Nick Child, in the first instance, on +44(0)20 7544 2600. They and their teams of Clerks will be pleased to advise you on the member of Keating Chambers appropriate to your requirements.