UK: Project Management: The Liability and Standards Expected of a Project Manager

Last Updated: 14 July 2011
Article by Nicholas Gould


The services offered by Project Managers ("PMs") vary considerably, as do the qualifications and experience of the people putting themselves forward for this role. There is no defined group of services for them to undertake and only a limited number of standard form contracts for their performance. The qualifications and experience of people practising as PM may stem from the professional side of the construction industry, as in Architects, Quantity Surveyors or Engineers, or may emanate from the contracting side, such as in the management teams of major main contractors.

The package of services offered may include providing, through others, all the design and consultancy services required for the project, with or without co-ordinating or chasing up the administration and supervision of any relevant construction main or sub-contract(s). In other cases, a PM may simply exist as an additional tier of advice and administration between the Architect/Engineer on one hand and the Employer on the other, in other words act as the Employer's agent in all contractual matters, sometimes including the engagement and briefing of the Architect, the Quantity Surveyor and other consultants.

The role and services of a Project Manager

The Chartered Institute of Builders has produced a Code of Practice for Project Management for Construction and Development. The definition of project management in the 2002 third edition is worth comparing to the 2010 fourth edition. The third edition stated:

"Project management is the professional discipline which separates the management function of a project from the design and execution functions".

The fourth edition states that project management is:

" established discipline which executively manages the full development process, from the client's idea to funding, co-ordination and acquirement of planning and statutory controls, approvals, sustainability, design delivery, through to the selection of procurement of the project team, construction, commissioning, handover review, to facilities management co-ordination".

As with all construction professionals, the primary obligations owed will be found in the express and implied terms of the PM's appointment. As there is, as yet, no formal legal recognition of a distinct profession of PM, it is likely that when ascertaining the relevant duty of skill and care, the court will look at the profession from which the PM comes. In other words, if the PM is an Architect, the standard will be the standard of skill and care to be expected of a reasonably competent architect holding himself out as carrying on project management work.

Legal liability

A number of general observations regarding the role of PMs were made in the case of Royal Brompton Hospital NHS Trust–v- Hammond (2003) 88 Con LR 1 in 2003, when the Judge said that:

  1. Project management is still an emergent professional discipline, in which professional practices as such have not yet developed or become clearly discernable. The standard of care required of a PM is therefore likely to depend upon his particular terms of engagement and of the demands of the particular project;
  2. Nevertheless it was clear that a central part of the role of PM was to be "co-ordinator and guardian of the client's interest";
  3. Moreover, the terms of engagement of other consultants will be material in defining the scope of the PM's duties, since duplication of the function is not expected. For example, on the facts of that case, although the Architect was the contract administrator formally appointed under the contract, that function had been transferred de facto to the PM;
  4. The PM is the Employer's primary representative and should be regarded by other consultants as, in effect, an Employer (albeit a highly informed Employer) and should be kept fully advised by them. The expertise and knowledge of the PM will affect only the extent to which advice needs to be spelled out; the essential elements of the advice must always be clearly given although it may be thought to be pointing out the obvious;

In the case of Chesham Properties Limited –v- Bucknall Austin Project Management Services [1996] BLR 2, the claimant sued both the Architect and the PM in respect of what it alleged were excessive extensions of time together with loss and expense awarded to the Contractor. The Court found that where it would have been apparent to a reasonably competent PM that the Architect, Engineer and/or Quantity Surveyor were not performing their respective duties, he had an obligation to inform the Employer. The case illustrates the potential width of the duties owed by PMs managing the professional input of a variety of multi-disciplined contributors, particularly given that the conventional professional team had been engaged for some period of time before the PM came on board. The Judge was of the view that:-

"The Project Manager was plainly under a duty, on the true construction of the contract in such terms and made in such context, to report to the plaintiff on deficiencies in performance on the part of its co-defendants."

There are relatively few reported cases concerning PMs alone; most claims are likely to be ancillary to claims against other professionals. When considering how much of the loss should be borne by the PM, the court should have regard to the extent to which poor management was really the cause of the problem. In Palermo Nominees Pty Limited and Micro Bros Pty Limited –v- Broad Construction Service Pty Limited (Supreme Court of Western Australia, Parker J, CIV 2439 of 1996, the PM was held to have fallen short of their contractual duties and undertakings by failing to recommend the appointment of an external consultant to report on internal acoustics in respect of a project involving the design and construction of a nightclub.

The case of Pozzolanic Lytag Limited v Bryan Hobson Associates [1999] 89 BLR 267 considered whether a project manager owed a duty of care to the client to ensure that the professional indemnity insurance of the consultants was adequate. The case concerned the construction of a concrete dome, which due to a design defect collapsed causing considerable financial loss to the employer. The main contractor was primarily liable under the JCT Design and Build Form of Contract, but did not maintain adequate insurances required by the contract.

The TCC Judge held that the defendant engineer was liable to the employer for not ensuring that the contractor had adequate professional indemnity insurance, and for not ensuring that professional indemnity insurance was in place. The defendant engineer pleaded contributory negligence on the part of the employer for not himself checking the insurance. This plea was rejected by the Judge. The Judge held that the fact that the PM lacked the expertise necessary to assess the adequacy of the insurance arrangements which the Contractor did have in place did not relieve them of their responsibility. They could not simply act as "post-box".

The "good working rule" in Pozzolanic Lytag

The key question in Pozzolanic Lytag was set out on page 3 of the judgment:

"The case raises questions as to the scope of the duty owed by projects managers to their clients to ensure that suitable insurance arrangements are put in place by contractors."

In Pozzolanic Lytag reference was made to the Code of Practice for Project Management for Construction and Development. Although there was a misapplication of the 1996 edition the author listed duties and responsibilities undertaken during the management of a construction contract. The list included:

"(l) Compile all contract documents ... establish the client's requirements on such matters as ... insurance requirements ...

(o) ... Ensure the contractor has complied with insurance and bonding requirements".

Mr Justice Dyson accepted that this was "a good working rule" as to the scope of the duties to be undertaken by a project manager in relation to insurance. There were two caveats:

(i) There should not be a "slavish" application of the list; and

(ii) The list is subject to any "special requirements" made between the client and the project manager.

Mr Justice Dyson came to the conclusion that the project manager in that case owed a duty to the employer to take reasonable care to "ensure" that there was in place insurance that would cover the contractor's liabilities in respect to the building contract. No insurance was in place. The real or effective cause of the loss was the project manager's failure to ensure that the contractor had taken out the relevant insurance.

What does a PM need to do in order to "advise"?

In Pozzolanic Lytag Mr Justice Dyson stated on page 8:

"If a project manager does not have the expertise to advise his client as to the adequacy of the insurance arrangements proposed by the contractor, he has a choice. He may obtain expert advice from an insurance broker or lawyer. Questions may arise as to who has to pay for this. Alternatively, he may inform the client that expert advice is required, and seek to persuade the client to obtain it. What he cannot do is simply act as a "post box" and send the evidence of the proposed arrangements to the client without comment."

Mr Justice Dyson took the view that a project manager was to act in a proactive manner in respect of the insurances. Does this obligation relate only to the contractor's insurances, or does it extends to insurances that the Employer may need to obtain? Mr Justice Dyson was of the view that a project manager must inform the client and "seek to persuade the client to obtain" appropriate insurances. It is not adequate to simply act as a "post box" by sending evidence of the proposed arrangements to the client without comment.

The use of the word "persuade" suggests that a project manager should do more than just advise, but should make very clear to the client the importance of dealing properly with insurance. Also he is suggesting that even where the contractor is to take out the insurance, the client, meaning the employer, could be advised by the project manager to take out the insurance.

The case of Six Continents Retail Limited v Carford Catering Limited [2003] EWCA Civ 1790 concerned the construction of a restaurant which was damaged by fire during construction. Six Continents were the project managers and they engaged Carford to design and install the kitchen equipment. Once the restaurant had reopened, there was a problem with the spit-roaster. Carford had failed to follow the spit-roaster's manufacturing installation guidelines. The project manager had a duty in his appointment to check the condition and nature of the spit-roaster.

At first instance, the project managers were not liable. However, the Court of Appeal decided that the project manager was responsible. The project managers had escaped liability because they sent their client a letter from the spit-roast manufacturer that set out the recommendations for installation, but these were ignored by the restaurant. The Court of Appeal decided that simply forwarding a letter was not adequate. The project manager needed to be more proactive and should have assessed the fire risk and warned the client in much clearer terms.


These cases confirm a growing trend towards establishing some degree of legal accountability in the performance of project managers, albeit that the precise parameters of the duties owed are still evolving. In conclusion, the liability of project managers is onerous. They are not simply to act as a post-box, but they must fill their proactive and all-embracing planning, management and co-ordination role for the project. They need to think clearly ahead, advise the client accordingly about the costs risks and time implications of the project, not just at the start but on an ongoing basis.

This is an edited extract from a longer article on this topic by Nicholas Gould. To see a full copy of this article please go to

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Nicholas Gould
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