In PFI assets with considerable public or end user traffic, such as libraries, leisure centres, schools, offices and prisons, there is a high risk of regular incidents of vandalism and other types of damage caused by client-related parties. The costs of vandalism and damage, charged on top of standard PFI fees, can be prohibitive if not managed effectively, coming to tens, if not hundreds, of thousands of pounds each year.
The thorny issue of vandalism and other damage to PFI assets caused by client parties and how the cost and scope of such damage can be reduced using our 7 step approach is addressed in this article.
Managing Conflicting Interests
When it comes to attributing responsibility for damage the client and the contractor have conflicting interests. It is in the client’s interests to attribute all but the most obviously deliberate damage to poor provision or maintenance by the contractor. The contractor’s preference, on the other hand, will be to attribute as much damage as possible to deliberate vandalism or misuse and thus limit its own costs.
Determining who is right in such situations can lead to lengthy and costly disputes, which can materially damage partnership working. Therefore having robust procedures for:
- Minimising vandalism and misuse
- Categorising incidents of damage and
- Reviewing and dealing with recurring trends
will significantly reduce time and money spent dealing with damage caused, or allegedly caused, by client-related parties.
The 7 Steps to Minimising Contractor Charges for Client Party Damage
Follow this 7 step approach to help you minimise the costs of vandalism or genuine damage to on-site components and buildings.
Step 1: Identify and monitor vandalism hot spots
End users and on-site contractor staff should be able to pinpoint locations of recurring vandalism. These can be substantiated by interrogation of monthly monitoring reports. If the vandalism is frequent and costly enough to justify intervention, it may be worth installing a CCTV camera. There are cheap, battery operated cameras available on the market, which allow for easy and effective monitoring of hotspots. These can be moved from location to location, on the basis of need, at minimum cost and effort and will keep persistent offenders on their toes.
Step 2: Identify, challenge and charge frequent perpetrators
If perpetrators are caught in person or on camera causing deliberate damage, experience shows that the most effective ways to deter them from re-offending are to:
- Publicise who they are and what they have done, or at least make public the financial implications of such damage and the penalties imposed on perpetrators (see next point)
- Charge them for the damage, or
- In some environments, particularly in schools and prisons, with high volumes of deliberate and costly, but simply rectifiable damage, it has proven effective to get the perpetrators to rectify the damage themselves within sight of other building occupiers
Step 3: Adapt vandalism-prone facilities
If aspects of the building design foster frequent and costly vandalism, it may be cost-effective to make adaptations. Common examples include making toilet blocks open plan in schools, eliminating ‘nooks and crannies’ around the building, putting visibility panels in walls and doors of secluded spaces and adding ‘screamer’ covers to fire alarms.
Step 4: Identify and challenge fitness for purpose of frequently damaged components
If there is a trend of persistent damage to particular building components, which appear not to result from malicious damage, it is likely that they are not fit for purpose. A common example is regular failure of door locking mechanisms and handles in high-occupancy buildings. In such instances, the best way to rectify the problem is to bring in an independent specialist to determine if the component is fit for purpose. If the resulting report shows that the component does not meet the specification, the client has a right to require replacement at the contractor’s expense. The cost of engaging the expert is likely to be more than justified by the ensuing savings in charges for damage.
Step 5: Ensure adequate reporting by the contractor
To avoid lengthy disputes and unjustified charges, the client needs to ensure that the contractor supports any claim for vandalism and other damage with sufficient (preferably photographic) evidence and submits it within a reasonable time-frame. Otherwise the client will be within its rights to reject the claim on the grounds that its ability to verify the claim is diminished.
Step 6: Nominate an impartial party to allocate responsibility for damage
As mentioned above the client and contractor have opposing incentives to attribute damage to wear and tear or misuse by client parties. To avoid prolonged stand offs, it is good practice to use an impartial party to deputise in these cases. In standard accommodation-type contracts, these can be the representatives of the PFI company and the contracting organisation.
Step 7: Validate all charges for damage
As mentioned above the contractor has an incentive to attribute as much damage as possible to vandalism or misuse by client related parties. It is therefore essential that the client validates all claims. In some types of contract, it may be appropriate to get staff who work at the facility, such as a school bursar or library manager, to sign off the claim and inform the contractor that only claims signed by the authorised client party are authorised for payment automatically. The contractor should be required to list all incidents of damage and vandalism in its monthly reports and the client should check the claims against these.
In Summary
Contractor claims for damage caused by client related parties are an area of high risk for the client. It is, therefore, essential to take action to minimise such damage and to put in place robust systems to ensure the client only pays where there have been genuine instances of vandalism or misuse. Systems should also be put in place to recover costs from end users, where appropriate.
For support and advice on managing vandalism or other operational PFI issues, please do not hesitate to contact us on T. 0845 345 0130 or email: advice@bestpracticegroup.com
