Project management contract and works order: who bears the cost overrun and delay on a construction site

An investor launching a refurbishment or construction project generally signs two families of contracts: works contracts with the contractors, and a project management contract (contrat de maîtrise d'œuvre) with the architect or the design office. When the site goes off course, the reflex is to turn against the contractors. This is often a mistaken choice: cost overruns and delay frequently originate in an incomplete design, an underestimated cost estimate, an approval issued too quickly or a works order (ordre de service) signed without authority. It must also be possible under the contract to assert the claim against the project manager (maître d'œuvre), and the client (maître d'ouvrage) must not itself have ratified the drift during the works. This guide deals with the real scope of the engagement, the fate of additional works that were not ordered, the interplay between works orders and late-completion penalties, and the clauses to lock down before signing.

What the project management contract really commits the parties to

The project management contract is a contract for work and services (louage d'ouvrage) within the meaning of Article 1710 of the French Civil Code. It concerns an intellectual service: designing, costing, consulting, approving, directing the execution of the works, assisting with acceptance of the works. It does not concern carrying out the works. This distinction governs the whole liability regime: the project manager does not guarantee the physical result of the works in the same way as a contractor, but is answerable for its own faults in design, direction and advice.

The scope is defined by reference to the breakdown arising from Law No. 85-704 of 12 July 1985, known as the MOP Law, now codified in Book IV of the second part of the French Public Procurement Code, and from Decree No. 93-1268 of 29 November 1993, reproduced in Articles R. 2431-1 et seq. Even in private contracts, this grid has become established as the contractual reference: preliminary sketch or diagnosis, preliminary design, detailed design, project, assistance with works contracts, approval of execution studies, direction of the execution of the works, assistance with acceptance of the works.

Two grey areas are costly for the client.

The first concerns scheduling, supervision and coordination (ordonnancement, pilotage et coordination, OPC). This task is not part of the basic engagement. It must be expressly entrusted, to the project manager or to a third party. An investor who has not commissioned OPC and who then complains that the project manager failed to produce a detailed programme, to coordinate the trades properly or to chase defaulting contractors comes up against a decisive contractual objection: the service was not within the scope. As regards delay, this is the project manager's most effective defence.

The second concerns the difference between direction of the execution of the works (direction de l'exécution des travaux, DET) and permanent supervision. The project manager is not required to be continuously present on site. The project manager is required to provide effective direction, evidenced by periodic visits, site meeting minutes, written reservations and alerts. A contract that sets no frequency of visits and no format for minutes leaves the client with no reference point to establish a failure.

Not confusing project management with other contractual arrangements

Three neighbouring structures produce very different regimes. The project owner's agent (mandataire de maîtrise d'ouvrage) acts in the name and on behalf of the client, within the limits of the mandate, and can bind the client. The general contractor (contractant général) gives an overall undertaking as to result on price and time, taking responsibility for the contractors itself. The property developer, under a property development contract (contrat de promotion immobilière), undertakes to have the works carried out. The project manager, for its part, has no power to commit the client financially unless expressly authorised. This absence of authority is the pivot of disputes over additional works.

For a legal entity, using an architect to prepare the architectural project submitted for a building permit is mandatory under Article 3 of Law No. 77-2 of 3 January 1977 on architecture. The exemption in Article 4, the threshold of which was lowered to 150 m² of floor area by Decree No. 2016-1738 of 14 December 2016, is reserved for individuals building for themselves. A holding SCI (French property holding company) cannot rely on it.

The duty to advise and the commitment on the financial envelope

The project manager's duty to advise operates at three stages, and it is the most productive ground for disputes for an investor.

At the upstream stage, it concerns technical and administrative feasibility: planning constraints, easements, the condition of existing structures, the need for additional investigations (trial pits, structural surveys, asbestos, lead, mapping of utilities). A project manager who costs a heavy refurbishment without recommending a structural survey cannot then attribute to chance alone the discovery of floors that have to be entirely redone. The courts accept that the fault lies less in the discovery itself than in the absence of prior warning about the likelihood and cost of that discovery.

At the execution stage, the duty to advise becomes a duty to warn. As soon as the project manager notes a cost or time overrun, it must inform the client in writing and propose options. Silence is a fault. An investor who discovers the overrun at the time of the final overall statement of account (décompte général définitif) has lost all ability to decide: it can no longer reduce the programme, change the technical solution or terminate.

At acceptance, assistance with acceptance of the works involves listing non-conformities and advising on whether to make reservations, to accept in part or to refuse acceptance. Acceptance given without reservation on apparent defects causes the client to lose the benefit of the statutory guarantee of perfect completion (garantie de parfait achèvement) under Article 1792-6 of the French Civil Code for those defects. The project manager's fault is then directly measurable: it corresponds to the cost of the remedial work that is no longer guaranteed.

The cost estimate is not a mere order of magnitude

A project manager who supplies a cost estimate of the works is bound by it. It is accepted that a gap between the estimate and the actual cost engages its liability where the gap exceeds a reasonable tolerance and results from a faulty underestimate, and not from programme changes decided by the client. The sanction takes two forms: reduction or refund of fees, and damages corresponding to the cost overrun, sometimes reduced to a loss of a chance (perte de chance) where the client would probably have carried out the project even at the real price.

For an investor, what matters is played out in the drafting. Three provisions change the balance: setting a target cost to which the project manager commits, defining a quantified tolerance threshold beyond which its liability is engaged, and expressly excluding programme changes from the scope of that commitment. Without a contractual threshold, the debate becomes an assessment of what was appropriate before the expert, then before the judge, with an uncertain outcome.

Additional works: Article 1793 of the Civil Code as a line of defence

The question that occupies the most construction disputes is simple to state: who pays for works that were not in the contract?

Where the works contract is a fixed-price contract (marché à forfait) based on a plan settled and agreed with the owner of the land, Article 1793 of the French Civil Code provides strong protection for the client.

Where an architect or a contractor has undertaken the construction of a building for a fixed price, according to a plan settled and agreed with the owner of the land, the architect or contractor may not claim any increase in price, whether on the pretext of an increase in labour or materials, or on the pretext of changes or additions made to that plan, if those changes or additions have not been authorised in writing, and the price agreed with the owner.

Two cumulative conditions are therefore required for additional works to be payable: written authorisation and agreement on the price, coming from the client itself. It is settled that acceptance must be express and unequivocal, and that it cannot be inferred from the client's presence at site meetings, from knowledge of the works, from their acceptance or from their usefulness. A contractor that carries out works without that writing bears the financial risk.

Three points of vigilance remain decisive.

First, the scope of application. Article 1793 presupposes an overall fixed price and a settled plan. Contracts priced by measurement or by unit prices, or contracts whose programme was not definitively fixed, fall outside this rigour. In those configurations, proof of the order may result from a body of evidence, and the client's position deteriorates significantly. Characterising the contract upstream is therefore a strategic choice, not a formality.

Second, substitute claims. The contractor whose claim fails regularly relies on unjust enrichment under Articles 1303 et seq. of the French Civil Code. That route is closed: Article 1303-3 reserves the action to a person who has no other action, and the failure of the contractual action based on Article 1793 does not reopen the door to a subsidiary action. The same reasoning applies to attempts based on management of another's affairs (gestion d'affaires).

Finally, ratification. The client loses the benefit of Article 1793 if it pays for the additional works without reservation, signs a regularising amendment or accepts a statement of account that includes them. Some cases are thus lost, not on the law, but on conduct during the works.

The position of the project manager who gave orders without authority

Where the additional works were ordered by the project manager alone, two scenarios must be distinguished.

If the client is not required to pay, the contractor turns against the project manager who gave the instruction. The liability of the project manager is then engaged for having exceeded its powers.

If the client is ordered to pay, because the contract was not a fixed-price contract or because the client ratified, the client has a claim against the project manager: the latter committed the project beyond its engagement and deprived the client of its power to decide. The loss is measured by the difference between the cost incurred and the cost that would have resulted from an informed decision, including where relevant abandoning the item.

An explicit clause is needed in the project management contract: a prohibition on ordering any variation work without the client's prior written agreement, above a nil or low threshold, and a guarantee from the project manager for any sum claimed as a consequence of a breach of that prohibition.

The works order: an act of execution, not a power to commit

The works order (ordre de service) is not defined by the Civil Code. Its legal force depends entirely on the contractual framework chosen.

In private building contracts, the reference is standard NF P 03-001, the general administrative terms and conditions (cahier des clauses administratives générales, CCAG) applicable to building works under private contracts, in its 2017 edition. It applies only if the contract expressly refers to it. It governs the form of the works order, who may issue it, the time limit for challenging it and the consequences of performance under reservation. In public contracts, the CCAG Travaux approved by the Order of 30 March 2021 provides a more restrictive regime: the works order is written, dated, numbered and notified, and the contractor must carry it out even where it disputes its content, provided it has done so within the time limit laid down.

From the investor's standpoint, three rules must be laid down contractually.

• The works order falls within the technical direction of execution: it concerns pace, coordination, remedying a defect, stopping or resuming the works, and time.
• It can never change the price, the programme or the contractual time for completion without an amendment signed by the client.
• Any works order with a financial or timetable impact is subject to a dual validation process, project manager and client, before notification.

This last rule, which reflects the four-eyes principle, is what distinguishes controlled site governance from a site where the client discovers the bill at the end. In practice, it requires a register of works orders kept and transmitted periodically, continuous numbering, and a clause of relative nullity for works orders that have not been validated, enforceable against the project manager if not against contractors acting in good faith.

Late-completion penalties and works orders extending time

Late-completion penalties are a penalty clause (clause pénale) within the meaning of Article 1231-5 of the French Civil Code. Three consequences follow.

They are due as soon as there is non-performance, without the client having to prove loss. As the judge has the power to reduce a manifestly excessive penalty or increase a derisory one, a rate calibrated to the real economics of the project holds up better than a deterrent rate. Finally, Article 1231-5 makes the penalty subject to prior formal notice, unless the contract stipulates that penalties run automatically on expiry of the time limit: that stipulation must appear in every works contract.

The point of articulation, often overlooked, is this: through its works orders, the project manager has the power to neutralise the client's late-completion penalties.

A works order stopping the site, a works order extending time, the generous recording of days lost to bad weather, the postponement of a time limit for intervention to wait for another trade: each of these acts moves the contractual completion date and removes the base of the penalties to the same extent. Where the project manager, for the sake of a comfortable relationship with the contractors, extends time without technical justification or without warning the client, it causes the client to lose a claim.

Two operational consequences follow.

First, the project management contract must make any works order extending time subject to the client's written agreement and require a technical justification. Second, where the project manager has refrained from applying penalties that were contractually due, or has neutralised them without reason, the client may seek its liability up to the amount of the lost penalties, most often on the basis of loss of a chance.

Symmetrically, the well-advised investor stipulates penalties for the project manager itself, which is rare in practice. They usefully relate to deliverables that can be dated: delivery of the project studies, issue of approvals on execution studies, transmission of site meeting minutes, preparation of the overall statement of account. A project manager who lets an approval period run for several weeks blocks procurement and feeds a delay for which, absent a clause, it bears no direct financial consequence.

Characterising and quantifying the investor's loss

A site that goes off course produces, for an investor, distinct heads of loss that must be itemised. A global assessment is systematically reduced by the expert and then by the judge.

• The cost overrun on the works, net of programme changes decided by the client and net of corresponding savings.
• The additional financing cost: interim interest, non-utilisation fees, the cost of extending a developer loan or bridging loan.
• The loss of rental income during the period of delay attributable to the defendant, established by signed leases, agreements to lease or a substantiated market rental value.
• Penalties and compensation owed downstream, in particular to buyers under off-plan sales (vente en l'état futur d'achèvement) or to tenants whose delivery date was not met.
• Additional project management and supervision costs, technical assistance costs and extended security or insurance costs.

Two heads of loss meet constant resistance. The rise in construction cost indices is in principle a matter of economic risk and price revision clauses, not of fault. As for hardship (imprévision) under Article 1195 of the French Civil Code, it is frequently excluded by the contracts themselves, and relying on it requires an unforeseeable change of circumstances making performance excessively onerous, a high standard.

Where several parties have contributed to the same damage, the client may pursue each of them in solidum for the whole, claims between co-liable parties then being settled among themselves. This mechanism is valuable against an insolvent contractor, provided that the project manager's liability is established within its own engagement.

Insurance cover must be checked before signing, and not when a claim arises. The architect is required to hold compulsory insurance under Article L. 241-1 of the French Insurance Code for damage of a ten-year liability nature (décennale). By contrast, professional liability policies cover purely financial losses from exceeding the budget and from delay poorly, or even exclude them. An investor should require the annual certificate, the detail of the limits per claim and per year, and confirmation that the project falls within the declared scope of the policy having regard to its value.

Procedural timetable: which act triggers which time bar

Chronology governs strategy.

Before acceptance, the action against the project manager is contractual in nature and is time-barred after five years from the day on which the client knew or ought to have known the facts, in accordance with Article 2224 of the French Civil Code. After acceptance, Article 1792-4-3 confines to a period of ten years from acceptance the liability actions brought against builders on account of damage affecting the works. Losses from delay and cost overrun, which do not affect the works, fall rather under the five-year limitation period: the starting date must therefore be secured very early.

In private contracts, the final statement of account and the time limit for challenging it provided for by the CCAG to which the contract refers constitute a second guillotine. A statement of account that is accepted, or not challenged within the time limit, disposes of part of the financial debate. The rule is even more rigid in public contracts, where the overall statement of account that has become final is in principle unalterable.

On the evidential side, summary proceedings for the appointment of an expert under Article 145 of the French Code of Civil Procedure (référé-expertise) remain the central tool. They make it possible to obtain, before any trial, the appointment of a court-appointed expert tasked with describing the defects, dating the delays, identifying the causes and allocating responsibility. Three parameters determine its effectiveness: the extent of the mission requested, which must expressly cover the attribution of the delay and the quantification of the cost overrun and not only the description of defects; the joining of all the parties involved, failing which the report will not be enforceable against those who were not parties to it; and the speed of the application, before the site is completed and the traces erased.

Where the claim is not seriously open to challenge, summary proceedings for an interim payment (référé-provision) under Articles 835, paragraph 2, and 873, paragraph 2, of the French Code of Civil Procedure make it possible to obtain a substantial advance without waiting for the merits. This route presupposes a documentary file that is already assembled: works orders, site meeting minutes, warning letters, formal notices.

The clauses to lock down before signing

Construction disputes are won at the drafting stage. On the investor-client side, eight provisions make the difference.

• A scope of engagement detailed by phase, with explicit mention of the inclusion or exclusion of OPC and of health and safety coordination (coordination SPS).
• A contractual frequency of visits and a format for minutes, with a time limit for circulation.
• A target cost, a quantified tolerance threshold and a clause reducing fees in the event of a faulty overrun.
• A prohibition on ordering variation or additional works without prior written agreement, with a guarantee from the project manager.
• A validation process and a numbered register for any works order with a financial or timetable impact.
• Making any extension of time subject to a technical justification and the client's written agreement.
• Penalties for the project manager itself on its deliverables that can be dated, and an obligation to propose the application of the penalties owed by the contractors.
• An obligation to send the insurance certificate with limits annually, and to declare the project to the insurer.

On the works contracts side, the choice of a fixed price with a settled plan, the contractual exclusion of Article 1195 and a clause providing that penalties run automatically on expiry of the time limit complete the arrangements.

Conclusion

The allocation of cost overrun and delay is not a question of fact; it is a question of contractual drafting and documentary discipline. Article 1793 of the Civil Code effectively protects the client against additional works that were not ordered, but this protection evaporates as soon as the contract is not a genuine fixed-price contract or the client ratifies the drift through its payments. Likewise, the best-calibrated late-completion penalties are worth nothing if the project manager retains the discretionary power to extend time by works order.

The position is therefore clear: an investor should not treat the project management contract as an ancillary contract aligned on the architect's model, but as the instrument for controlling its financial exposure on the project. Before any works order is notified under the first contract, have the project management contract and the works contracts audited as a single whole, and put in place from the opening of the site a register of works orders subject to dual validation. It is this document, and not the letters exchanged at the end of the works, that will determine who bears the cost overrun.

Frequently asked questions

Can the project manager bind the client by signing alone a works order for additional works? No, unless expressly authorised. The project manager has a technical direction engagement, not a power of financial representation. Where the contract is a fixed-price contract within the meaning of Article 1793 of the French Civil Code, additional works are payable only if they were authorised in writing and the price was agreed with the client itself. A contractor that carries out works on the project manager's works order alone bears the cost in principle and may turn against the project manager.

Does the client's presence at site meetings amount to acceptance of additional works? No. Under Article 1793, acceptance must be express and unequivocal, and cover both the works and their price. Neither knowledge of the works, nor their usefulness, nor acceptance of the works is sufficient. By contrast, payment without reservation of an interim statement that includes those works, or the signing of a regularising amendment, amounts to ratification.

Is OPC included in the project manager's basic engagement? No. The breakdown arising from the MOP Law of 12 July 1985, codified in the French Public Procurement Code, and from Decree No. 93-1268 of 29 November 1993 excludes scheduling, supervision and coordination from the basic engagement. It is a complementary engagement that must be expressly commissioned. Failing that, the client cannot criticise the project manager for the management of the overall programme and the coordination of the trades.

Can the project manager be required to pay the late-completion penalties it did not apply to the contractors? Yes, on the basis of contractual liability, where the contract entrusted it with monitoring time limits and calculating penalties. Compensation is frequently analysed as a loss of a chance, the judge assessing the probability that the penalties would actually have been recovered, in particular having regard to the contractors' solvency and the power of reduction under Article 1231-5 of the French Civil Code.

Does a works order extending time permanently remove late-completion penalties? It moves the contractual completion date and reduces the base of the penalties to the same extent. Its effect nevertheless depends on its regularity: if the project management contract makes any extension subject to the client's written agreement and a technical justification, an irregular works order is enforceable against the project manager and founds a liability action up to the amount of the lost penalties.

What time limit applies for taking action against the project manager after a delayed project? Before acceptance, the contractual action is time-barred after five years from knowledge of the facts, under Article 2224 of the French Civil Code. After acceptance, Article 1792-4-3 imposes a period of ten years from acceptance for actions relating to damage affecting the works. Losses from delay and from exceeding the budget, which do not affect the works, fall under the five-year limitation period: the starting date must be documented from the first warnings.

Is a court-ordered expert appraisal under Article 145 of the CPC useful for a dispute over delay and cost overrun? Yes, provided the mission is drafted accordingly. A mission limited to describing defects will not make it possible to attribute the delay. It is necessary to expressly request a chronology of the site, identification of the causes of slippage, examination of the works orders and quantification of the cost overruns. All the parties involved, project manager, contractors, design offices and insurers, must be joined so that the report is enforceable against them.