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Posted By CFT
All
I could do with some thoughts please. We have one project for a variety of reasons, that is being shelved indefinitely, it is a large commercial premises which is at steel complete level, so resembles a large metal skeleton; foot print wise it is 200,000 sq ft over 3 floors.
It commenced a couple of years ago and has stood idle for around 18 months now under the control of the PC. The client has decided not to pursue this project for the time being and the PC wishes to pass the management of the projects across to me, for which I have little concern as I have made certain the site is suitably protected from any uninvited access (trip wires, electric fences, hidden trap doors etc just kidding) I therefore have no reservations regarding responsibility; having so said, it is the clients intention (my employer) to retain the contractual arrangement with the PC and leave the submitted F10 where it is, and pay for regular inspections by a structural engineer.Oh by-the-way, all exposed upper levels are protected by scaffolding ( I realise the inspection scenario) to a height of 1200mm with no gap greater than 250mm and TB's to 300mm with plastic net in-between.
I have no way of knowing just how long this is likely to be, it could be years (for many reasons) my argument is why not terminate the contractual relationship, de classify it as a 'construction' site and treat it in the same way as I would manage many other commercial properties at the same location? I see no likelihood anything will go wrong but why keep a contract in place when there is no immediate intention of continuing with the project?
The PC wishes to formally hand over responsibility for this non-development to me, again, I have no issues, I have had a variety of tests carried out on soils, structural integrity, CAT scans etc and finally the site is fully enclosed by Herras fencing, chain linked and both stairwells are sealed and locked; access to height is virtually impossible, 24 hour CCTV monitoring, it is lit automatically, regular inspections etc; this is not a problem; I cannot however see the relevance in keeping a contract between two parties live when no works will take place for the foreseeable future; the more simple an audit trail the better IMO. To add, the PC as a company is being shut down shortly and although on paper it will still exist it will NOT be completing this particular project; I therefore cannot for the life of me see why the contract needs to be kept live.
I would really appreciate AN others thoughts on the subject; my concern is solely restricted to the contractual relationship between the client and teh PC, not my responsibilities or what I need to do to look after it successfully.
Many thanks in anticipation.
CFT
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Posted By Paul Leadbetter
Charley
How can the contract continue once the PC ceases to exist?
Paul
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Posted By Robert K Lewis
Interestingly it is the client who appoints the PC and is the one who therefore effects a change from the one appointed. You cannot relinquish the PC role until either the client agrees or you determine the contract itself.The latter step can be difficult and render the contractor liable to additional costs over and above any contract values. They will have to demonstrate frustration of the contract to be found not liable.
The only winners here will be the lawyers. If I were the contractor I would be looking for a regular payment from the client to maintain a presence on site, probably around the cost of two or three supervisors plus accomodation etc costs per week. It seems to me that the client may be hoping to freeze the tender sum by attempting to hold on to the PC at no cost.
Bob
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Posted By CFT
Paul
Thank you for that one; I detailed that in a letter yesterday, nice that you mentioned it.
Bob
The PC and the client whilst two separate companies come under the umbrella of one parent organisation; your suggestion would just be about shifting money around internally. I am trying to logically see what possible reason there is by keeping the contract live when the construction company is only being retained on paper for the immediate future (records and history and portfolio if you get the drift)it is, and is likely to remain a non-functioning site.It's not a huge issue, but I like things a bit cleaner than this.
CFT
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Posted By Robert K Lewis
CFT
Money has to be at the back of this somewhere, as I cannot see any other reason to keep the contractual arrangements active, particularly as it is internal. The logic could be tax, fixing of subcontract sums etc. The client side has the upper hand however.
Bob
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Posted By Glyn Atkinson
Charley,
Any hidden tax benefits from keeping this alive?
Is the land likely to be adapted for change of commercial / domestic use within the space that no one knows about, demolish current work and restart on new project?
There has to be a reason if any costs are going to be incurred by a "dead" company - no one sensible throws away money on nags any more -
(by the way any tips for tomorrow's National?)
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Posted By CFT
Yes Glyn
A horse will win it, of this I feel certain.
Charley
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Posted By Tony abc jprhdnMurphy
Wrong
the bookmakers win by a country mile...every time.
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Posted By Ron Hunter
CFT, you say the PC wants to hand the Site(responsibility)over to you, but who or what are are you/ who do you work for?
Many of the issues we usually concern ourselves with on this forum will revert to the Occupier in terms of liability.
Given that the construction phase has been suspended there is a strong argument to say the PC is not the occupier.
Is this whole somewhat tortuous arrangement not just an attempt to escape occupier liability issues?
I don't think that the status of any contract or activity on site would determine that, my guess (and it's only a guess) is that liability will fall back on the Client -it is his Project after all and he will presumably have or hold some interest in the title of the land.
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Posted By CFT
Ron
Your not wrong; its tough to put into easily understood wording sometimes.
Scenario
200 acre Business Park 70% complete. All completed areas run smoothly and are (via service charges) run by a management company appointed by the owners of the Park, (me), now a remaining acreage (and there are a few currently undeveloped)started the project I mentioned, client, PC CDMC dah di dah.
It has stood idle for a long time and is unlikely to be completed; the owner of the Park but not the client has a company appointed to develop it (the client) and the PC is also a company owned by the owner of the Park. I have no issues about taking over from the PC for and on behalf of the client but have reservations about the retention of teh original contract between teh client and the PC, particularly as the construction company is now non-active but still registered under F10, I simply don't see why the contract can't be terminated and a simple agreement between the client and the managing company cannot be created to look after the project, which is extremely simple to handle; it is the reluctance to terminate teh contract between the client and teh PC I cannot comprehend and have thus far been unable to find out why.
You will understand that I have concerns for the client and in particular the PC (all same family of companies)in terms of legal liabilities and explaining that the project is still under F10 seems to be falling on deaf ears.
It would be simpler for all concerned if it were terminated and my own responsibility was one of simply managing the empty site which is not exactly a problem as we are based here!
I was hoping someone may have offered a suggestion as to why they don't want to terminate the contractual relationship; I just can't get my head round why!
CFT
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Posted By Martyn Hendrie
This may be to do with new rules on business rates. I think unoccupied (but available) premises will attract 50%?? rates.
By keeping it a construction site there will be no applicable rates to be paid.
I have heard suggestions of premised not yet occupied having windows removed to classify them as under construction and avoid having to pay the new rates
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Posted By CFT
Martyn
Thank you, that at least makes sense.
CFT
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