Blog 5 - THE PRINCIPLE AGENT

Illustration by Tania Glavas ©

Once you have decided on your building contractor, be sure to pick your agreement carefully. There are plenty acceptable contracts out there, however, I tend to measure them up against the JBCC PBA. An essential element of this agreement is the weighted role of the principle agent.

Briefly, this role involves the administration of the contract on behalf of the employer; overseeing the signing of contract documents; site handover; quality control; progress; variations; delays; payment certificates; coordinating other professionals; issuing defects lists and completion certificates - all this while remaining impartial between the parties.

I have filled this position for 19 years as an architect; however, it is my 9 years as arbitrator that has led to my true understanding of this crucial role. Approximately 8/10 of the disputes I arbitrated resulted from the incompetence of the principle agent. A lack of dedication to strict procedure or allowing the employer to take over and interfering with their independence is a common transgression. These issues are grounds for breach. Parties feel their rights are compromised, a disagreement follows, the principle agent remains silent and a dispute emerges. At that point the only remedy is to enter into expensive, time consuming, arbitration or litigation.

Typically, building contracts kick off in good faith. The client puts up a payment guarantee, the contractor comes with good references and with an airtight agreement what could possibly go wrong? The bliss of this honeymoon period can only continue if strict control over both parties’ duties is maintained. Parties should never reach a point of questioning each other’s performance. If queries do emerge, the principle agent repeats the terms, conditions and consequences. If a party fails to follow an order, without good reason, they must be placed on terms. Any delay in issuing notices compromises parties’ interests and the overall flow of the project.

On signing the building agreement, it is the employer that appoints the principle agent. However, it is essential that the contractor agree with this appointment. An unbiased principle agent, well equipped with a sound knowledge of the building contract and the basics of contract law, guides the parties through an as smooth as expected process, all the way to a successful building handover.