The draft Building Safety Bill (the Bill) contains measures that are unlikely to come into force until 2021. Furthermore, a lot of the detail in the Bill, which aims to improve building and fire safety in higher-risk buildings, has been left to the regulations that will follow once parliament has passed the Bill.
However, we are likely to see changes to procurement, the structure of projects and contractual provisions allocating the risks of compliance much before then. This insight considers some of the main points that parties to relevant construction contracts should be considering in order to mitigate risks.
Generally, parties (to the extent they are able to) will look to allocate the risk of complying with the Bill. Therefore, once negotiated parties will need to review, understand and look to properly manage those allocated risks.
Dutyholders
The Bill provides for dutyholders. In the design and construction phases, in the same vein as the CDM regulations, the dutyholders include: the Client, the Principal Designer and the Principal Contractor. These parties will need to be familiar with their responsibilities under the Bill such as competence, collating and maintaining information required to be provided to the new regulator and the mandatory reporting of structural and fire safety occurrences, which could cause a significant risk to life safety. This is especially given that the potential sanctions of not complying with some of these obligations can be up to two years in prison, unlimited fines or both.
Gateways and the golden thread
The new system is divided into gateways, with the information being assessed at each gateway by the regulator:
- Gateway 1 – at the planning application stage. The required information will be provided by those applying for planning permission for developments.
- Gateway 2 – at the initial building control stage (akin to depositing full plans). Gateway two provides a “hard stop” where construction cannot begin until the regulator is satisfied that the duty holder’s design meets safety requirements.
- Gateway 3 – equivalent to the current completion/final certificate phase. All the prescribed documents and information (Hackitt’s “golden thread” of information) must be handed over to the accountable person. Dutyholders will be required to submit to the regulator prescribed documents and information on the completed building.
The later, detailed regulations will set out the regulator’s powers in terms of inspecting the works, details of the information required and time periods for making decisions. Future contracts will allocate any time and costs risks of delays caused by these gateways. Parties will therefore need to manage and prepare for each gateway to avoid delays and mitigate the risks.
In respect of Gateway 3 we will no doubt also see practical completion being linked to the prescribed information being provided. Clients are unlikely to waive this going forward as it will be required to obtain the Building Assurance Certificate, without which it will be an offence to occupy a building. Principal Contractors and Designers will therefore need to have processes in place to make sure the requisite information is collated and maintained throughout the project. Clients may also impose requirements on the use of BIM, given that the required information is going to be required electronically.
Competence
The Bill makes provision for further regulations to outline the competence required of those taking on work that needs to comply with building regulations. This is not limited to work on higher-risk buildings. Whilst the requirements for competence are left for the secondary legislation, companies should take steps now to put in place management of training processes and ensure staff are adequately trained in areas they work in. In any event and even without the provisions of the Bill, this would be best practice to mitigate risks of breaching contract provisions. As Clients will also have a duty to check the competence of those they instruct to undertake works, this is likely to form part of the procurement process going forward.
Clerk of works
Given the likely new responsibilities on Clients, as dutyholders, to ensure that their developments comply with building regulations and the mandatory reporting of serious fire issues, we have already seen many more Clients appointing clerk of works to monitor, inspect and report on the works during the construction phase. Whilst the clerk of works role seemingly went out of fashion with design and build procurement, they can hugely reduce contract risks for clients on any project. As they independently report on delays and defects, and maintain proper records on the same, this can not only help to mitigate delays and reduce defects, but can also be extremely useful when faced with claims for additional time and monies from contractors and consultants.
Clients, designers and contractors should all take steps now to ensure they are in the best position to price, understand and mitigate the statutory and contractual risks once the legislation comes into force. With Covid-19, Brexit and the changes under the Bill there is certainly a lot for parties to consider in contractual negotiations, pricing and management in the near future!
