ABSTRACT
The worst contractual disaster I ever got involved in was the construction of an effluent treatment plant for a chemical manufacturer. The purchaser wanted to employ a respected firm of consultants to carry out pilot plant trials to establish the process requirements and the design parameters. The purchaser also wanted the consultant to be involved right through the contract. An agreement was made between a major civil engineering contractor and the consultant that the contractor would take on the construction work but would employ the consultant to do the pilot plant trials and, importantly, to be the designers for the contract.
The purchaser was happy with this arrangement and, in the mid 1990s, agreed to place a reimbursable contract with the contractor, under which the pilot plants trials would be carried out, the design parameters established and a cost estimate agreed as a ‘target cost’. All was going well and the cost estimate was produced at £24m. The purchaser did not have enough money and a number of changes were made in the scope to reduce the costs to about £15m.
