FAQ.03

Question:

My client applied for a bank loan as a part of renovation project, I am working as an architect. The bank has approved the loan. However, the bank wants me to act as a 'project monitor' to monitor the progress and timely completion of the project. Can I perform this role?

Short Answer:

Acting for two different parties, whose interests differ, creates a conflict of interest for members and should be avoided.

Expanded Answer:

Certifying payment on a contractor’s application for payment is a common service that a client engages the holder of a Certificate of Practice to provide as part of their role during the Construction Contract Administration phase of a project. (See the OAA Website Knowledge Base: filter – construction phase; keywords – payment certification, certificate)

In certain circumstances, a holder may be asked to provide a similar service to a lending institution. The holder, acting as a “project monitor”, provides certification of contractor’s progress payments by completing the lending institution’s standard form. Performing the role of a Project Monitor to a lending institution falls within the scope of services of a holder; however, there may be terms or conditions within the lending institution’s form that expose the holder (acting as Project Monitor) to increased liability and risk. Furthermore, if a holder is also providing payment certification to their client for the same project, they have a conflict of interest (refer to Regulation 27, 43(1)(e) of the Architects Act), as well as being exposed to liabilities that are not insurable for matters arising out of this relationship.

Holders need to be aware of small, but significant, differences that may exist between standard OAA wording for Certificates for Payment and the wording that may be found on forms provided by lending institutions or municipalities. These groups are looking to protect their own interests and reduce their risk by transferring liability to a third party – the holder. One such example can be found in the slight, but significant differences between “in general compliance with” versus “in compliance with”, where the latter implies 100 percent (strict) compliance in every respect. Signing off on a form that includes a statement such as “in compliance with” is not advisable. For example, in order to state accurately that the work is strictly “in compliance with” would involve having a staff person follow each and every worker on a job site every hour of every day that they are on the project. This level of effort is not required to evaluate “general compliance”.

Whether asked to provide Project Monitor services to a lending institution, or asked to provide copies of field reports and payment certificates to a lending institution (while providing payment certification for your client), OAA Practice Tip PT.17 Lending Institutions – Holder’s Certificates, provides more detailed background on this situation, with suggested procedures should you find yourself faced with a similar request.

References:

OAA Practice Tip PT.17 Lending Institutions – Holder’s Certificates