Construction & Engineering

STANDARD FORM CONTRACTS

Public Works Contracts

Following the Office of Government Procurement’s July announcement of changes being made to the PWCs, the following are now available:

• an Information Note on the Amendments,
• amendments to the PWCs to introduce a Limit on Liability Clause (in PW-CF1 to PW-CF8 and FTS-1 to FTS-8),
• a new Guidance Note on the Limit on Liability Clause (GN 2.3.5),
• amendments to the PWCs to introduce a new Price Variation Clause (in PW-CF1 to PW-CF6 CF8 and FTS-1 to FTS-6) and Price Variation Workbooks. A Supply Chain Co-operation Framework will also be provided,
• a revised Guidance Note on Price Variation (GN 1.5.2),
• amendments to the Suitability Assessment Questionnaires for Works (SAQs: QW1 to QW4). These include changes to reflect legal updates and new requirements, which listed in the Information Note. For example, new suitability criteria include Environmental Management Measures and Supply Chain Tracking,
• amendments to Instructions to Tenderers (both Open and Restricted procedure) to reflect the above amendments, and
• an Information Note on BIM.

Limit on Liability Clause: The clause provides that the liability of a Contractor to the Employer is limited to a monetary amount stated in the Form of Tender and Schedule. If the Employer does not state an amount, the clause states that the Liability Cap is no greater than the Contract Sum. This Liability Cap does not apply in all circumstances and is subject to exclusions specified in the clause. The Guidance Note describes the operation of the clause and provides guidance on how to determine the Liability Cap level. (GN 2.3.5)

Price Variation Clause – Material and Fuel: The Contract Sum may be adjusted for fluctuations in the price of materials and fuel. Fluctuations in price indices published by the CSO for the categories listed in the Schedule will be used to determine adjustments to the Contract Sum.

Price Variation Clause – Labour: For PW-CF1 to PW-CF5, the Contract Sum may be adjusted for price fluctuations in labour. Changes in sectoral employment orders applicable to the labour categories in the Schedule that come into effect after the Base Date will be used to determine adjustments to the Contract Sum.

Price Variation Clause – Employer Specifications: In the Schedule, the Employer specifies: (i) proportions of the Contract Sum eligible for adjustment; (ii) weightings to be given to the categories (that is, CSO Indices / SEOs) to apply in the contract; and (iii) a value for the Permitted Increase Threshold for material and fuel categories, which must be between 3% and 10% (that is, the threshold above which inflation costs are recoverable). In circumstances of deflation, adjustment is permitted where the decrease is more than 10%. (GN 1.5.2)

Date of application: These clauses apply to tenders received on or after 27 July 2023.

NEC

In the UK, a construction sector playbook for NEC users in the private sector is available. It includes guidance on setting up a project and defining success, understanding and apportioning risk, using modern methods of construction, defining a procurement strategy to create value, bid evaluation and contract award, modern workplace requirements, creating a platform for change, measuring success and checking in, and transition to handover and effective aftercare.

ADJUDICATION

Practical Guide to Adjudication on the Island of Ireland

The law on contractual payment mechanisms and adjudication is an important element of construction law in both jurisdictions on the island of Ireland. Given that companies active throughout the island may find themselves dealing with two statutory regimes, we have prepared a guide on what it helps to know about both systems, which is available here.

Enforcement Decision

The High Court in Ireland enforced adjudication orders in a further application for enforcement in DNCF Ltd (applicant) v Genus Homes Ltd (respondent) [2023] IEHC 490. In this case, the employer sought to resist adjudication based on an argument that the adjudicator breached fair procedures by having regard to issues which had not been raised by the parties, and failing to canvass the views of the parties on these issues. Mr Justice Simons did not find this to be made out on the facts and granted the application to enforce the decision. The judgment sets out a helpful analysis of the relevant legal principles, again emphasising that the legislative regime in this jurisdiction is different to that applying in the UK. Our fuller briefing will be available shortly.

SUSTAINABILITY

Net Zero

The RIAI and IGBC have joined forces on a joint programme of research, support tools, guidance and up-skilling of professionals to address decarbonisation of the built environment. Design4Zero is funded by the SEAI under its National Energy Research Development and Demonstration Programme. Further info is available here.

Modern Methods of Construction

The Department of Housing, Local Government and Heritage published a Roadmap for increased adoption of MMC in Public Housing delivery and an MMC Introductory Guide.

Contract Clauses

In the UK, the TCLP has made available new clauses to: (i) provide for a gain-share incentive for reducing GHG emissions, and (ii) require counterparties to comply with the Global Standard on Responsible Corporate Climate Lobbying and review how their investments align with the goals of the Paris Agreement.

De-forestation Due Diligence

Many products, including timber and timber products, are covered by a new Regulation (EU) 2023/1115 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation.

The Regulation will prohibit placement of relevant products on the EU unless they are deforestation-free after 31 December 2020; produced in line with the relevant legislation of the country of production; and covered by a due diligence statement indicating that there is no more than a negligible risk of non-compliance. Main obligations under the Regulation begin from 30 December 2024. Penalties for non-compliance are to be set out by Member States but may include fines and temporary exclusion from public procurement processes. Further information is available here and an FAQ document is here.

BUILDING REGULATIONS

Technical Guidance Document C on Site Preparation and Resistance to Moisture has been amended to ensure new buildings have suitable prevention systems by referencing the most up-to-date radon map.

BUILDING CONTROL AND FIRE SAFETY

The Minister for Housing, Local Government and Heritage, Darragh O’Brien published a Code of Practice for the Remediation of Fire Safety Defects in apartments and duplexes constructed between 1991 and 2013.

GB PRODUCT MARKINGS

The UK Government announced an indefinite extension to the use of CE markings in Great Britain, which it previously had intended to phase out and replace with a new UKCA mark after Brexit. However, as noted in this Financial Times report, the situation is different for construction products and medical devices, which were not covered by the extension announcement and still have to use the bespoke UK quality assurance system. CE markings continue to be recognised across the board in Northern Ireland.