A project manager has recently been found liable for their employer’s losses caused by not ensuring that a contract was completed for a construction project.  This was decided in the case    of Ampleforth Abbey Trust v Turner & Townsend Project Management Ltd. 

The facts of the case are that Ampleforth employed Turner & Townsend as its Project Managers to manage the construction of a new boarding house   at Ampleforth College.  For various reasons, the works were commenced under a letter of intent provided by Ampleforth to the building contractor.  The letter of intent was drafted by Turner & Townsend.

As the works were carried out, the letter of intent was extended and superseded, by further letters of intent.  No building contract was ever executed.  Once the building works were completed, disputes arose between Ampleforth and the building contractor.  One of the disputes involved late completion of the construction works and the ability of Ampleforth to claim liquidated damages of £50,000 per week.  This was the sum included in the draft contract which was never executed. 

The dispute between Ampleforth and the building contractor was resolved at mediation.  However, Ampleforth then decided to take proceedings against Turner & Townsend for professional negligence in not ensuring that a building contract was executed.  Ampleforth had not been able to recover the liquidated damages of £50,000 per week in the mediation.

There were a number of substantial points that were argued at trial.  These included causation, mitigation of loss and reliance on limitation of liability clauses.  However, the first principle was whether or not Turner & Townsend could be liable in the first instance for professional negligence.  The court held that Turner & Townsend owed a duty of care to act with reasonable skill and care in the performance of its duties, both at common law and by Section 13 of the Supply of Goods and Services Act 1982.  It was held that part of a project manager’s duties could include advising on, and assisting with, the contractual documents.  It was held that it is not an absolute obligation to ensure that a building contract was executed.  However, it could be for the project manager to take reasonable steps to ensure a building contract was completed.  It was held that in this case, Turner & Townsend did take on these responsibilities but had not taken reasonable steps to ensure the building contract was completed.  Also, Turner & Townsend had failed to advise Ample- forth of the need to have the building contract completed and to take the necessary steps to put pressure on the parties to ensure that it was completed.  There appears to have been no warning to Ampleforth of the consequences if the contract was not completed.

As a result, Turner & Townsend was found liable for Ampleforth’s losses.  It seems clear, therefore, that it is dangerous for project managers to allow building projects to be completed under letters of intent.  If they do not advise employers of the problems that may arise if a contract is not completed and do not take reasonable skill and care in trying to ensure that the contract is completed then they could be liable for losses caused by the contract not being completed.  Those potential losses could be considerable; they could include liquidated damages as in this case but there would be many other circumstances where losses may arise.  For example, if the contractor decided not to complete the works as there was no contractual duty to do that then it might be possible to claim the extra costs of employing a different contractor to carry out the works.

The duty would not be restricted just to project managers.  It would apply to all professionals and consultants who are contracted by employers to complete the contractual documents for a building project.  This case demonstrates the importance of such professionals ensuring that contractual arrangements are completed and are not forgotten about once the building works are actually commenced.