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Taking on unfinished work 'risky', builders in south told

By Emmet Oliver

Published 26/07/2011

More than 1,000 building firms throughout the Republic have been told in a private circular by the Construction Industry Federation (CIF) not to accept responsibility for the unfinished work of construction firms which have gone bust.

The firms have been told that accepting responsibility for finishing such work is "extremely risky" and may be "reckless".

"Ideally, such contracts should be avoided unless the contracting authority agrees to change the conditions," the circular from the CIF's director of tendering states.

The problem of unfinished buildings and half-developed sites is becoming a major problem around the country, the organisation is reporting.

But it warns members that in their eagerness to win contracts they may be opening up themselves to risk if they accept full responsibility for previous work done by now collapsed firms.

The CIF, led by Tom Parlon, has seen its members taking huge financial hits over recent years, with sub-contractors in particular losing millions of euro when companies have gone under.

"The acceptance of responsibility for partially completed works, undertaken by others and without any direct specific knowledge of the circumstances in which it was undertaken, carries enormous risk,'' wrote Don O'Sullivan, director of tendering.

"Members are strongly advised that acceptance of responsibility for work carried out by others is extremely risky and may in some circumstances be reckless,'' he added in the letter, which was sent out in recent days. While the organisation is warning of the dangers, it does not advise members to completely rule out such contracts.

"Where members decide to proceed with a tender where they are carrying responsibility for work carried out by others, additional costs are inevitable. If they do decide to take part in the tender competition, they should ensure that they have been provided with sufficient information to enable them to adequately appraise these costs. To do otherwise may result in circumstances in which their business and the completion of the project will be at grave risk,'' said Mr O'Sullivan.

The CIF is contacting all local authorities, the National Roads Authority and other public agencies to express its concern about the issue.

It provided an example of the kind of contract clause that is causing it concern.

One included in the letter reads: "In addition to their responsibilities (which can be quite substantial), the successful contractor will be required to take on full responsibility for all existing and previous works carried out by the original contractor on the project."

The CIF claimed that the public body which gave out the original contract should be more knowledgeable about the quality of the previous work, not the new contractor.

"All this work would presumably have been supervised by architects and engineers retained by the client," the organisation makes clear.

A performance bond should have been put in place to protect the contracting authority from any costs associated with a collapsed project, the letter states.

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