Novation, construction monitoring and conflict of interest?

Hi All

Firstly to clarify, I’m not looking for an argument about whether or not I should be doing construction monitoring as I know others opinions on this and I’m not keen to get into that.

I’m keen to hear others perspectives or opinions on whether novation to a contractor for construction monitoring is a conflict of interest.

I have been told by another consultant that they believe it is and I can see how it could be.

The situation is like this:

  1. We have done a fire design and had it consented for our client X.
  2. Client X then wishes to novate our contract to contractor Y for a design/build
  3. All we have left to do on the project is construction monitoring (we already have consent however chances are there will be minor amendments during construction)
  4. Construction monitoring is us checking that what is being built by contractor Y and their subcontractors is compliant with the Consent docs.

So if we are checking contractor Y’s work and also being paid by contractor Y is this a conflict of interest? Should we be contracted to someone independent, eg. client X.

Thanks all

There seem to be a few different matters for consideration.

  1. Conflict of interest
  2. Ethical conduct
  3. Contractual matters

Items 1 and 4 relate to your design and checking your design has been implemented by the construction contractor. I do not see a conflict in interest with respect to that matter. I am also assuming you do not have a financial interest in the project or own shares in the construction company (either of those could create a perception of a conflict of interest).

No matter who you are contracted by you have to operate ethically. In this case, taking reasonable steps to safeguard health and safety, report adverse consequences, and inform others of the consequences of not following advice. This is what would typically be a part of construction monitoring. I do not see any ethical issue with that.

Contractually engineers would not be doing any work without someone paying for it. Is working for a construction contractor in the role of construction monitoring any different from working for the building owner performing the same role? There may be a difference in the construction contractor wanting to comply in a way this satisfies the building consent but may not have the same long term interests as the building owner. Where those differences occur it would be best to communicate to the building owner prior to starting the contract so that they are fully aware of that being the case. Outside of that communication it appears to be more of a question of loyalty than a conflict of interest. From my perspective obeying the building act and operating ethically is more important.

Thanks Kenneth, agree with what you’ve said and we always ensure we are obeying the Building Act and operating ethically. Maybe ‘conflict of interest’ wasn’t the right term to use.

Its more that having a commercial contractural arrangement with the same entity of which we are inspecting works (and often failing their works) has great potential for commercial issues/conflict.

That sounds a little like a power balance issue. I always listen, be fair and helpful to construction companies. However conflict can be unavoidable if someone insists on performing poorly, especially when you have given them one or more opportunities to do the right thing. At that point it’s more about how you handle an adverse situation.