Reflections on construction management procurement following Great Eastern Hotel Company v. John Laing

Abstract

Construction management as a procurement method has been used increasingly in the UK construction industry, particularly for complex, multidisciplinary project work. Great Eastern Hotel v. John Laing (2005) (the ‘GEH’ case) is the first case to be decided by the courts in England in respect of works completed under a construction management agreement (CMA) and, as such, sets a precedent for the industry. As a precedent, this judgment has implications for construction management as a form of procurement and for construction management as a profession. The implications arising from the decision in this case pose problems for the future construction industry, which are considered here. The consequences arising from this decision for the profession of construction management and the expected levels of competency of individual construction managers are considered. This judgment defines a legal benchmark for construction management which hitherto did not exist. Construction management as a form of procurement has been viewed as placing the highest proportion of risk with the client in the event of problems. The construction management company, having no direct contractual link with any of the subcontractors, was seen as carrying a relatively low level of risk. Following the decision in GEH, the statement that a construction management company carries a low level of risk has to be revised. In addition, it is submitted that the GEH judgment will act as a driver for change in the perception of construction management and its future as a method of procurement. Questions are also posed regarding the level of competence of the construction manager post GEH.

Keywords:

• Construction management
• procurement
• liability
• negligence