Marble tiles are often used as cladding to walls or floors of main lobbies in high end commercial and residential buildings because these exude a certain unique aura of grandeur and opulence. One of the reasons for such unique characteristic is because it is extracted from natural quarry rather than manufactured in factories, thus carrying a distinct exclusivity in its aesthetics. However what is less commonly known is that such marbles, granites or natural stone works are extremely prone to contractual disputes, more so than standardised manufactured building products like ceramic tiles, homogeneous tiles, mosaic tiles etc. 

Ironically, the unique feature of natural stones which makes it aesthetically appealing is exactly the reason that renders it vulnerable to disputes. From the buyer’s perspective, it is challenging to precisely define the appearance of marbles that it seeks to purchase since these are sourced from natural quarry rather than designed and fabricated in a controlled environment such as factory. From the seller’s perspective, it is equally challenging to commit with absolute certainty if the desired marbles are indeed available in stone quarries. Whilst it is possible for parties to settle with generic marble specification, this can be a source of dispute if a large quantity of marbles supplied are rejected based on subjective aesthetic criteria. Therefore there is an element of guess work or risk at the inception of the agreement that had to be managed carefully.

The risks of the stone works are exacerbated when the buyer specifying the product and the seller supplying the product are not in direct contract with one another. Very often, such stone works are procured under a subcontract where the Employer nominates its preferred stone contractor to its main contractor, so as to avoid the risks that comes with contract privity. In other words, it is the main contractor that enters into an agreement with the stone contractor under a subcontract arrangement where the former has little or no involvement of the stone procurement process. It should be noted that the main contractor is usually not the party deciding on whether the stones supplied are aesthetically acceptable or in line with the design intent. These critical decisions are usually made by the architect in consultation with the Employer. Therefore, it is not surprising to find that stone works becomes a fertile ground for disputes which are avoidable to begin with. This article examines these problems in further detail. The multi perspective discussion included in this article will hopefully enhance one’s ability to frame the problems with appropriate context and clarity.

Issues With Natural Stones Specification

In an ordinary transaction, the buyer specifies the product based on certain brand or model and the seller supplies accordingly. There is no mystery to the goods being transacted. As alluded to in the preceding part of this article, marbles and natural stones in general are difficult to be specified in absolute certainty and accuracy because it is a naturally occurring stone sourced from quarries located in mountainous region. Mankind does not have control over how geological rocks are formed including its colour, grain variation and veining patterns in general. 

There are various generic trade names used to describe natural stones such as “Arabescato Corchia”, “Statuario Venato”, “Travertine” etc. These names are generic in that it could refer to stones originating from certain region that exhibit certain physical characteristics including colour tonality and vein-like features which contain mica or other trace of minerals. However even geological experts could at times disagree whether a batch of marble in dispute belongs to certain geological group or whether it conforms with its alleged trade name. This can be contrasted with other manufactured commodities such as a smart phone where no reasonable person would dispute over what actually is an iPhone 15, as there is an objective universal definition based on its appearance, model and operating performances. Due to the inherent subjectivity with the exact definition of natural stones, there are difficulties in enforcing such specification. These natural stones particularly marble are costly types of wall and floor finishes usually installed at prominent space within a building. Therefore the architect and interior designer are expected to be very sensitive and strict with the types of marble appearances that is deemed acceptable. 

To fully appreciate the issues pertaining to marbles specifications, one needs to understand what are the common procurement practices. At present, stone contractors tendering for projects are usually required to submit their bid prices based on amongst others, a pricing schedule with generic stone trade names as well as a set of specifications. The specifications may include amongst others, a description of the appearances of required marbles, the country of origin or region from which the marbles are to be sourced, the establishment of an approved control range after the contract is formed based upon a visit or several visits to the contractor’s recommended quarry. The said control range typically refers to several marble slabs selected from the identified quarry that conform with the architect’s design intent based on its physical appearances which include the exhibited vein patterns, colour tonality, knots, swirls, waves and overall aesthetic appeal. Upon establishing a control range of marbles, the specification further stipulates the subsequent cutting, polishing, dry laying and shipping of approved marbles from overseas quarry to the project site for its final installation.

Whilst the above general description of what can commonly be found in marble specification appear reasonable, in reality it could be fraught with risks for various reasons. Firstly, the contractor would be required to submit and be committed to its tender price even before having sight of the marbles that are deemed acceptable. Whilst there may be written descriptions of acceptable marble appearances included in specification, such wordings pale in comparison with actual visual confirmation of marbles that are required. That is why despite what may be written on the marble specifications, there is typically a mandatory requirement of establishing a control range that visually exhibits the acceptance criteria after the contract is formed. In other words, the definition of product to be transacted only crystallise after parties signed on the dotted line, at which point the water is metaphorically under the bridge. 

It should be noted that the unit rate committed by the contractor for any given type of marble is usually inclusive of an estimated percentage of wastages and rejections. If the contractor pays for 100m2 of marbles to the quarry owner for its marbles and expects only 70m2 are accepted or approved, the rejected 30m2 are nevertheless included in its unit rates and prices under the contract. Such projection is purely a commercial risk assessment that varies depending on marble types and its expected rejection rate. If the actual rejection rate exceeds original projection, this invariably result in financial loss. Anecdotally, marbles that are meant to be installed in aesthetic focal points such as grand lobbies, building entrances etc are expected to be more stringent in its selection criteria resulting in higher rate of rejections. Having the control range of marbles established post contract formation presents various commercial risks. Firstly, the control range could be significantly different from the contractor’s expectation resulting in higher rejection rate than initially anticipated. Secondly, the quarry recommended by the contractor may not have adequate supply that aesthetically matches the approved control range resulting in the need to explore new quarries and the consequential schedule delay. 

Issues With Subcontracting Arrangement For Stone Works

Marble and stone works in general are typically procured under a nominated subcontract arrangement where the actual agreement for the works is between the main contractor and a subcontractor with procurement efforts led by the Employer and its consultants. The architect and Employer are focused on the aesthetics of the building design that naturally motivated them to playing a lead role in shortlisting, tendering, interviewing, negotiating and finally selecting the stone contractor. Upon receipt of a nomination instruction from the architect, the main contractor will complete the subcontract execution process pursuant to the standard conditions. The main contractor will apply the agreed profit and attendance costs on the subcontract sum in lieu of the original prime cost sum. 

Whilst the main contractor usually assumes the execution risks associated with the stone works, it unfortunately has a limited role during the procurement of the stone works. Certain aspects of procurement process are understandably sensitive as it involves tender price comparison, commercial negotiations and tender interviews where commercially confidential information are only disseminated on a need to know basis. Therefore the main contractor is only meaningfully involved in the procurement when the stone contractor is selected and ready to be nominated under a subcontract arrangement. Consequently, various critical discussions pertaining to the choice of marbles and its acceptance criteria as well as the expected aesthetic appearances are done in the absence of the main contractor. 

Under the nomination procedures stipulated pursuant to the main contract standard conditions, there are certain protective measures available to the main contractor albeit on a limited basis. By way of example the main contractor may object to any such nomination if the subcontractor’s proposed programme is not consistent with its master programme or there are reasonable doubts on either the solvency or technical competence of the nominated subcontractor, amongst others. In reality however, most of these concerns would have been dealt with during the procurement process since the main contract document and nominated subcontract document are essentially prepared by the same consultant quantity surveyor. Therefore most if not all of the discrepancies or inconsistencies would have been addressed prior to nomination in order to avoid the main contractor’s objection to the very nomination.

The main contractor typically has no design and aesthetic related responsibilities under traditional procurement route but is now placed in a precarious position of being implicated legally and financially if and when aesthetic related issues arise on the marble works it “inherited”. In other words, if there are any disputes or differences on the scope of negotiation between its subcontractor and the architect, the main contractor is inevitably exposed despite its absence during those discussions. By way of illustration, assuming the subcontractor was unable to source for marbles that matches with the approved control range resulting in multiple rejections and schedule delay, the delivery of the project as a whole could be compromised. Other subcontractors that are suppose to commence their subcontract works upon completion of marble cladding installations will be consequently delayed and would rightly be expected to claim for financial compensation and time extensions from the main contractor. Likewise as regards the stone subcontractor in dispute, its only recourse will be legal action against the main contractor due to contract privity. This is despite the fact that any dispute in rejection of stones is essentially an issue between the architect and the stone contractor. The main contractor unfortunately becomes the proxy of disputes. If and when the dispute deteriorates to an advance, acrimonious and irreversible manner, it could result in the termination of the subcontractor’s employment and engagement of a replacement stone subcontractor. This drastic contractual measure however does not quite solve the root of the problem. This is because the replacement subcontractor is unlikely to be able to source for marbles that matches with the approved control range that was first establish under the original subcontract. The original control range could have been extracted from certain quarry many months if not more than a year ago and there is no way to guarantee that a new batch of stone sourced will exhibit the same physical characteristics as desired. That is just part and parcel of working with Mother Nature. Despite the original problem remained unresolved, the main contractor is now required to expend precious resources to deal with the legal ramifications following the contract termination actions. 

Process vs Product

When drafting a specification for any given scope of works, it is important to ascertain whether one is primarily focus on the end product or the process of creating/manufacturing the very product. It is a balance between two considerations namely ‘product’ and ‘process’. In the earlier part of this article, an analogy was made using iPhone to illustrate the importance of having a universal definition of the subject of transaction for avoidance of misunderstanding. Using the very same analogy but applying it on the balance between product and process, one has to ascertain whether it is more important to focus on the appearance, operating performance and function of the iPhone or should one place more emphasis on where the iPhone is assembled, the country of origin of its electronic components and where the rare earth minerals used in the iPhone are sourced. If the end user is indifferent about the manufacturing process but is more concern about how the end product will perform, aesthetically or otherwise, then the specification should be more product focused. Using the construction technical parlance, it is the balance between performance based specification vs prescriptive based specification. 

As and when marble related disputes arise, it is often associated with the end product in particular its appearances or aesthetic performance. Admittedly, there could other non appearance related issues resulting in rejections such as damaged/ broken marble tiles, lack of anti slip surface treatment resulting in safety hazard or even poor workmanship in installation. These issues however can often be resolved relatively easily because the problems can be objectively defined and issues are self evident. 

It is not uncommon to note that most marble or natural stone specification in use are disproportionately focused on the process rather than the product. It is quite common for specification to include various processes such as the region from which the stones should be sourced, the geographical identification of the quarries from the prescribe region of origin, the number of marble blocks that had to be produced from the selected quarry before marble slabs are cut from these blocks, the types of machine used for cutting and polishing of the marble slabs into marble panels/ tiles etc. It is entirely possible that the end product marble may still not be aesthetically acceptable even if all the specified processes are fully complied. In fairness, there are also opposing views on this matter which are quite understandable. Some may take the position that by instituting rigorous processes and approval ‘check points’, it allows early warning if the marble in production are not acceptable rather than to learn about it at the eleventh hour when these are delivered to site.  Also, since there are pricing premiums for marbles from certain regions, it is entirely reasonable to have certain means of verification. In view of the different perspectives on the above mentioned issues, it is advisable for the Employer and its consultant to discuss and debate the above mentioned issues thoroughly in order to decide the best way forward. The specification should be a strategic document that is drafted on a project by project basis rather than a default template document used on a recurring basis.

Off Site Challenges

The architect usually discharges dual function in most construction projects where he firstly designs the building and secondly ensures construction works conforms with his design intent. As regards the marble and natural stone construction works, his latter function with respect to supervision and quality control becomes challenging when the quarries are located in various regions around the world. It is therefore quite common for a project domiciled say in Singapore to have its marbles sourced from several countries simultaneously such as Turkey, Italy or China. Where building materials are sourced in a foreign country, there could be various off site challenges such as workers strike affecting shipping and port clearances, breaches of environmental laws in respect of mining activities in specified quarries resulting in suspension of works, closure of site over winter period etc. The architect’s ability to manage these situations is further compromised if he does not have sufficient local representatives that could deal with those challenges with the relevant on the ground connections and relationships. Whilst these execution risks could be outsourced to the contractor through the terms of the contract, the architect is ultimately responsible to the Employer for the choices of material specified for the purposes of his design. 

As the marble and stone works are usually administered under a nominated subcontract, this usually indicates that the design approval is obtained from the Employer at a fairly advance stage of the construction works. It follows that the marble and natural stone works had to be executed over a compressed period of time. If and when any of the above mentioned off site challenges occurs during the subcontract period, there is very limited margin of error. Therefore as a matter of risk management, the architect usually favours having some form of his own representation being available on the ground where the marbles may be sourced. These architectural representatives had to deal with a whole host of issues including inspecting and approving dry lay of marble tiles, ensuring that the marbles sourced complies with the acceptance criteria set out in the control range, production of photographic reports of approved marbles for proper record and contract administration etc. These local representatives however are not the building designers and therefore the architect will have to provide his own final approval as and when necessary. In doing so the architect has to balance between ensuring only the approved marble tiles are shipped from these overseas locations and the logistical reality of not being on the ground most of the time. Whilst the architect could specify in its requirement that the stone subcontractor to provide certain manpower on the ground, he has to consider the need for check and balance in quality control and supervision. 

One of the possible solutions in overcoming the problems mentioned above is by procuring the marbles from the various regions ahead of schedule, even before the nominated subcontractor is engaged. These marbles could be purchase by estimation of quantity based on the latest design drawings and be shipped to a fabrication site located close to the project. In other words, the marble and natural stones could be procured in a manner similar to a regular long lead item where the ‘supply’ and ‘installation’ functions typically expected from a stone contractor are decoupled. Since bulk quantity of marbles are purchase in advance via a single transaction, the marbles’ veining and colour tonality are likely to be consistent, thereby reducing the risks of incompatibility in appearances. This is because these marbles are sourced within the same vicinity in the selected quarry that are subject to similar geological effects.

Conclusion

Given the risks associated with marbles and natural stones cladding works and the recurring types of disputes, it is in all parties’ interest to adopt a procurement practice that is mutually beneficial. Very often when disputes occur, the parties concerned are likely to believe that the procurement system could have worked better to mitigate or even completely avoid those issues in hand. The key is to act on those beliefs by improving the procurement system and risks allocation in advance.




Koon Tak Hong Consulting Private Limited