In Building Magazine Article, Hamish Lal Examines Cost and Time Overruns in Infrastructure Projects
Building magazine has published the article “NAO report: It’s the design, stupid,” written by Akin Gump international arbitration partner Hamish Lal. In the article, Lal examines a report by Britain’s National Audit Office that looks at cost and time overruns on higher‑value construction projects. Lal writes that the report “identified one specific issue that needs to be properly understood”—design.
Less developed design, Lal notes, means employers or owners “are more likely to hold more of the contractual risks and that the inherent uncertainties of early designs do not incentivize contractors, or their subcontractors, to negotiate and share risks, thus increasing risks for employer.” The risks are increased, he says, when building is started before the design is mature.
In order to set a target construction cost, Lal suggests that, “a deeper understanding of the design and the level of maturity in the design are fundamental.” In other words, he suggests that employers decide whether it is more appropriate “to separate out the design and construction in order to get a fixed price for the construction phase.”
Lal concludes by observing that the lesson learned from the NAO report is that “there should be greater awareness, assessment and obsession with the design phase relative to current practice.” He adds that the duration of the design phase should also be increased “relative to current practice.”