A Term Paper On

The Conditions of Engagement and Consultancy Services Agreements in Nigeria

A term paper on

THE CONDITIONS OF ENGAGEMENT AND CONSULTANCY SERVICES AGREEMENTS IN NIGERIA

Submitted by:

ADEKANYE P. ADEBISI. ARC/04/3164

BELLO O. VICTOR ARC/04/3184

In partial fulfillment for the award of a Bachelor degree in Architecture

COURSE: BUILDING LAW (ARC 510)

LECTURER: Prof. O. O. Ogunsote

November, 2009

TABLE OF CONTENT

1.0INTRODUCTION1

1.1DEFINITION OF TERMS1

2.0 THE EMPLOYER2

2.1APPOINTMENT OF CONSULTANT3

2.2SCOPE OF SERVICES3

2.2.1RESPONSIBILITIES AND SCOPE OF WORKS

OF THE CONSULTANT4

2.3 SCOPE OF PROFESSIONAL SERVICES FOR

CONSULTANT ARCHITECT AND SPECIAL CONSULTANT5

2.3.1 NORMAL SERVICES 6

2.3.2 ADDITIONAL SERVICES 7

2.3.3 PROJECT MANAGEMENT 7

3.0 SCALE OF FEES FOR CONSULTANTS 9

3.1 METHOD OF PAYMENT11

3.2 COMMENCEMENT OF SERVICES12

3.3 DELAY TO CONSULTANT’S SERVICES12

3.4 INCAPACITY OF CONSULTANTS12

3.5 ALTERATIONS AND MODIFICATION13

3.6 PROGRESS REPORT OF WORKS13

3.7 TERMINATION13

3.8 LAWS OF AGREEMENT14

3.9 ARBITRATION14

4.0 CONCLUSION15

REFERENCE

1.0 INTRODUCTION

With effect from the 12th April, 1996 the Federal ministry of works and housing signed into use scale of fees for consultancy services payable by the public sector to all professions involved in the construction industry and allied professions.

Also, various forms of agreement supported by schedules relating to the responsibilities of parties and other consultant which may be involved in the project and approved scale for all the disciplines.

Issues of scale of fees are clearly spelt out in the explanatory note issued by the ministerial standing committee on scale of fees signed into use in 1999 by the minister of Works and housing. Thus, serving as a template for all professionals for use in all negotiations with clients and in so doing are reminded that they are bound by the code of professional conduct.

1.1DEFINITION OF TERMS

The consultant: means the professional organization or person commissioned by the employer to carry out the services required under the agreement.

The services: means the professional services

The specialist consultant: means consultant in Civil Engineering, Structural Engineering, Mechanical and Electrical Engineering, Quantity Surveying, Town planning, and other professional discipline relevant to the project other than the Architect.

The employer: means the person or organization or Government obtaining the professional services under this agreement.

Engagement: means an agreement to do something within a particular or at a particular time.

2.0THE EMPLOYER

The employer is also the client. He nominates a clerk of works as his representative with whom the consultant deals directly with and through which information will be passes to the consultant. The employer has the following responsibility:

Initiates the brief for the project and produces briefing documents needed. He is to be assisted by the consultant. To be included in the brief are: site location map, survey plan, schedule of accommodation, services and appliances required, and any other requirement or consideration likely to affect the project.
Approves the project brief including briefs of each building, or other work before pre-contract activity commences. Approves the preliminary design and estimates of cost to allow the consultant to proceed with the final design. He also approves contract document and direct the consultant to invite tenders or negotiate an extension to an existing contract. He approves an acceptable tender and documents to be signed by the employer. The variations and final account are to be approved by the employer.
To make stage payment to the works contractor under the terms and condition of the works building contract.
Accepts the completed works following a joint inspection by the employer and consultant of the whole or part of the completed works.
Site accommodation: This involves the employer catering for the site offices and every other test/ analysis required by the consultant for the inspection and testing of the construction works.
Appointment of specialist consultant who are to be remunerated by the employer.

2.1APPOINTMENT OF CONSULTANT

The employer (client) hereby appoints the consultant and the consultant hereby agrees to act as consultant in connection with the project upon the terms and conditions and scale of professional charges hereinafter set forth.

2.2SCOPE OF SERVICES

The consultant shall undertake the responsibilities and provide the services described in the First schedule which entails; the normal services, partial and additional services.

Normal services: for the performance of the services, the consultant shall be paid in accordance with the scale of fees laid by the Government based upon the estimated total cost of the project.

Partial services: for the performance of the services, the consultant shall be paid in accordance with the scale of fees in the second schedule based upon an estimated total cost of the project.

Additional services: for the performance of the services, the consultant shall be paid in accordance with the scale of fees in the second schedule or upon a provisional fee calculated on a time change basis.

The consultant shall be reimbursed by the employer for all expenses actually and properly incurred in respect of items listed upon the presentation of detailed invoices with supporting receipts where practicable subject to a provisional sum is not exceeded.

2.2.1RESPONSIBILITIES AND SCOPE OF WORKS OF THE CONSULTANT

The responsibility and services of the consultants as spelt out on clause 23 of the conditions of engagement and consultancy services agreement issued by The Nigerian Institute of Architect (NIA) based on the Federal Government Approved 1996 Scale of fees.

The consultant must have the authority of the employer before initiating any service or work stage.
The consultant shall not make any alteration, addition to or omission from the approved design without the knowledge and consent of the employer except if found necessary during construction for constructional reason in which case they shall inform the employer without delay.
The consultant shall inform the employer if they have reason to belief the total authorized expenditure or contract period are likely are to be materially varied
The consultant shall not be responsible for the works contractor operational method, techniques, sequences or procedures or any of the contractor safety precautions with the works nor shall they be responsible by any failure by the contractor to carry out and complete the works in accordance with the terms of the work contract between the employer and the contractor.
The consultant will prepare proposals for consideration by the employer which may assist the administration of the construction program and also protect the interest of the employer.
The consultant will advice on the need for specialist consultant and will be responsible for the integration of their work. The specialist consultant shall be responsible for the detailed design and supervision of the work entrusted to them.
The consultant may recommend that specialist sub-contractors should provide special detailed design and execute any part of the work. He shall be responsible for the integration of their detail, and for general supervision of their work in accordance with clause 23.1 (h). Nominated subcontractors shall be responsible for the special detailed design entrusted to them.
The consultant shall give such regular supervision and inspection as may be necessary to ensure that the works are being executed in general accordance with the contract. Constant supervision does not form part of normal duties and additional services.
Where the employment of resident staff for constant supervision is agreed such staff will be employed by the consultant who shall be reimbursed in accordance with clause 24, table 3 of these condition.
Where frequent or constant inspection is required, a clerk of works may be employed. He shall be appointed and paid by the employer or alternatively may be employed by the consultant who shall be reimbursed in accordance with clause 24, table 3 of these conditions.

2.3SCOPE OF PROFESSIONAL SERVICES FOR CONSULTANT ARCHITECT AND SPECIAL CONSULTANT

The architect is referred to as the PRIME CONSULTANT in building project. His services are divided into three, they are:

Normal services
Additional services
Project management

2.3.1 Normal services

The normal services are in three stages which mark the progress of the architects work. These stages are spelt out in clause 23.1.2.0 of the conditions of engagement and consultancy services agreement issued by The Nigerian Institute of Architect (NIA) based on the Federal Government Approved 1996 Scale of fees.The stages include;

Stage 1: Preliminary design (Clause 23.1.2.1)

The consultant architect obtains the brief and required survey plans from the employer (client). He visits and appraises the site and also analyses the client requirement and sourcing other consultant input. Finally, In this stage he prepares the design scheme(s).

Stage 2: Production, Working drawing, Specification and details (Clause 23.1.2.2)

The consultant architect prepares comprehensive working drawings and contract documents. A detailed site plan, overall plans of the scheme for all floors and including roof plans, detailed dimensions, elevations, section, working details and material specification is also prepared in this stage. He reconciles the structural/ mechanical and electrical drawings with the architectural design.

Stage 3: Obtaining tenders to completion (Clause 23.1.2.3)

The consultant architect obtain, analyses as it relates to architects works and full report on tenders, preparing and advising on the contract and the appointment of the contractor. He supervises and co-ordinate all site works including a per-month formal site and technical meetings. The minutes of the meetings are circulated to all parties

2.3.2 Additional services

Additional services are services that are not stipulated in the initial contractual documents but are requested for by the client. Thus such additional expenses are footed by the client. This may be required according to the circumstances of the project to augment the normal services. Where there is no established basis for calculating the fees for additional services, the employer and consultant will discuss the required services at the onset and agree on both the method and the amount of remuneration. Additional services are spelt out in clause 23.1.3 of the conditions of engagement and consultancy services agreement issued by The Nigerian Institute of Architect (NIA) based on the Federal Government Approved 1996 Scale of fees. They include;

Development plan Development studies Special drawings and models, Special meetings Delays in the works Interior design,furniture and fittings, Litigation and arbitration Supervision.

Redesign an additional design work

2.3.3 Project management

As spelt out in clause 23.1.4 of the conditions of engagement and consultancy services agreement issued by The Nigerian Institute of Architect (NIA) based on the Federal Government Approved 1996 Scale of fees.

The functions include:

Identification of the clients objectives and priorities
Development and preparation of brief
Execute a risk analysis exercise
Establish the budget and the total project program
Establish and manage integrated communication and information systems between the client and the design team.
Advice on the appropriate procurement strategy.
Monitor planning permission and other statutory consents.
Establish the post contract time, cost and quality control and management systems.

Monitor and receive from prime consultant, report regularly through to the project completion, commissioning and occupation.

3.0 SCALE OF FEES FOR CONSULTANTS

The scale of fees for different consultant is spelt out in clause 24 of the conditions of engagement and consultancy services agreement issued by The Nigerian Institute of Architect (NIA) based on the Federal Government Approved 1996 Scale of fees. The clause is titled ‘Consultancy fees payable in the construction industry’ which was signed and approved by the then Minister of Works, Major General Abdulkareem Adisa.

Below are the scales of fees for some selected consultants:

Table 1: Scale of fees for Prime Consultant.

COST OF PROJECT / FEES PAYABLE AS A PERCENTAGE OF COST OF PROJECT
Up to 5 million / 4.75%
Next 10 million or part thereof / 4.5%
Next 15 million or part thereof / 4.25%
Next 45 million or part thereof / 4.0%
Next 75 million or part thereof / 3.5%
Next 150 million or part thereof / 3.0%
Next 200 million or part thereof / 2.5%
Balance over 500 million / 1.75%

Source: Conditions for engagement and consultancy services agreement.

These payments are made at different stages of implementation of project.

Table 2: Scale of fees where the Architect is not the Prime Consultant.

COST OF PROJECT / FEES PAYABLE AS A PERCENTAGE OF COST OF PROJECT
Up to 5 million / 3.00%
Next 10 million or part thereof / 2.50%
Next 15 million or part thereof / 2.25%
Next 45 million or part thereof / 2.00%
Next 75 million or part thereof / 1.75%
Next 150 million or part thereof / 1.50%
Next 200 million or part thereof / 1.25%
Balance over 500 million / 1.00%

Source: Conditions for engagement and consultancy services agreement.

Table 3: Additional services

ITEM / DESCRIPTION OF SERVICES / FEE PAYABLE
1 / Site investigations and project design / MAN-MONTH RATES ON TIME charges
2 / Research on brief and development of same / MAN-MONTH RATES ON TIME charges
3 / Feasibility or viability studies / 0.2% of estimated total cost
4 / Special drawings and models / Negotiable with client
5 / Processing of outline approval / MAN-MONTH RATES ON TIME charges

Source: Conditions for engagement and consultancy services agreement.

The scale of fees for other special consultants like:Civil Engineering, Structural Engineering, Mechanical and Electrical Engineering, Quantity Surveying, Town planning, and other professional discipline relevant to building project are listed in Clause 24 of The Conditions for Engagement and Consultancy Services Agreementissued by The Nigerian Institute of Architect (NIA) based on the Federal Government Approved 1996 Scale of fees.

3.1 METHOD OF PAYMENT

All sums due to the consultant under the agreement shall be paid in Nigerian Naira except under a clause. Fees shall be due as follows:

Stage 1: 25% of the fees based on the Estimated Total Cost (ETC) of the project.
Stage 2: 50% of the fees based on the Estimated Total Cost (ETC) of the project.
Stage 3: 25% of the fees based on the Estimated Total Cost (ETC) of the project.

Reimbursement expenses shall become due upon the presentation of accounts for each stage. Repetitive fees shall be due when the works contract for repeated buildings is awarded. Claims in respect of fees and reimbursement expenses due to the consultant shall be submitted to the employer. Fees and expenses are to be paid within thirty days of submission unless queried, by the employer within twenty days of submission. In event of a claim being queried a payment on account of that part which is not questioned is nevertheless to be made within thirty days of submission. While any part of any claims properly payable but remaining unpaid for more than 90 days from the date of delivery shall carry interest from the thirty first day from submission to the date of payment of the rate of 11/2% above the primary bank rate ruling in Nigeria at that time plus any inflation resulting from Government policy within this period.

3.2 COMMENCEMENT OF SERVICES

An agreement becomes effective upon the consultant’s receipt from the employer of written notice to proceed with the services to be provided.

3.3 DELAY TO CONSULTANT’S SERVICES

Where delays are caused by the consultant’s failure to obtain adequate reply, approval, or decision within thirty days after a request has been made by the consultant due to the following reasons:

The employer’s omission to reply, approve or decide within the said period of thirty days.
The failure of a third party who has been assigned by the employer to comply with the request to act, or to perform within the specified period.
The employer shall adequately compensate the consultant for any cost incurred as a result of the delay. The employer undertakes to consider and review all documents submitted by the consultant and to process any necessary approvals for the consultant within thirty days of the submission so as not to delay the consultant from giving drawings and instructions to the works contractor. If after thirty days no communication has been received from the employer, then approval shall be deemed to have been given.

3.4 INCAPACITY OF CONSULTANTS

If the consultant shall become incapacitated from action as consultant as aforesaid, the employer may make full use of all or any drawings estimates or other documents prepared by the consultant pursuant to and for use under this agreement without prejudice to the lien on such drawings or documents against unpaid fees. The employer shall not make use of such drawings or documents except for the purpose of the building works which are the subject of this agreement.

3.5 ALTERATIONS AND MODIFICATION

In the event of circumstances arising which could not have reasonably been foreseen or in the event of the employer ordering modification to completed designs or alterations to design in progress which involve the revision of any calculation, specification, drawings or other documents prepared under this agreement the whole of the cost of this revisions or reproducing documents to bring the work up to the stage at which it was shall be in accordance with some conditions. However in the event of the scope of work being so materially altered by the employer as to warrant the preparation of new additional documents and drawings, this agreement shall be treated as a new commission.

3.6 PROGRESS REPORT OF WORKS

The consultant shall prepare and submit to the employer four copies of a report to be prepared quarterly on the progress of the project. Such reports shall include the minutes of the monthly site meetings, records of labor, and materials on site, progress photographs, specialist consultant’s reports where applicable and a financial statement.

3.7 TERMINATION

This agreement may be terminated at any time by either partly on the expiration of three months notice when the consultant shall be entitled to remuneration in accordance with the provisions of the contract.

3.8 LAWS OF AGREEMENT

This agreement shall be deemed to be a Nigerian agreement and shall be governed and construed according to the laws including taxation laws being in force in the Federal republic of Nigeria. Both parties to the agreement shall comply with these laws.

3.9 ARBITRATION