Construction & Engineering
STANDARD FORM CONTRACTS
Public Works Contracts
Government Ministers announced there will be two significant changes to Public Works Contracts. The amendments are to be published on dates shown here, beginning on 17 July, and will apply in respect of tenders received on or after 27 July 2023.
First, there will be a cap on Contractor liability, to be specified by the Contracting Authority when tender documents are issued.
Second, there will be a new Price Variation Clause in PW-CF1 to PW-CF4, which will replace options PV1 and PV2. It will be linked to the CSO’s Wholesale Price Indices (ex VAT) for Building and Construction Materials and specified indices for energy and fuel. The threshold above which the inflation costs of materials and fuel will be recoverable by Contractors will be lowered from 15% to between 3 and 10%, the precise threshold to be set by the Contracting Authority when tender documents are issued. There will no longer be a fixed price period of 24 months for materials and fuel. The fixed price period for labour will be reduced to 24 months following which adjustment will be linked to the rates of sectoral employment orders made after the 24-month period. Similar types of amendments, with some differences, will be made to PW-CF5 and PW-CF6.
A Supply Chain Co-operation Framework Agreement will be provided for use, where agreed, to manage supply chain delay.
Tender documents will be amended to include consequential and other changes. For example, Suitability Assessment Questionnaires for Works will include two new suitability criteria: Environmental Management Measures and Supply Chain Tracking. Further details are available here.
Measuring and Reporting on Carbon
To measure carbon produced in the construction stage, the Office of Government Procurement is adopting the International Construction Management Standard. It is intended to support consistent reporting of costs, life cycle costs and life cycle analysis, including embodied carbon, across the National Development Plan. The first updated cost reporting templates are to be published in August 2023, with further amendments in 2024 and 2025. Further information is available here.
Building Information Modelling requirements will be introduced into the CWMF from January 2024, beginning with large projects. Further information is available here.
In the UK, JCT intends to publish an update to its suite of contracts in a JCT 2024 Edition. Workstreams feeding into the new suite are listed here and include future proofing to incorporate clauses relating to collaborative working, sustainable development and environmental considerations.
FIDIC intends to develop a contract for offshore windfarm projects to be delivered by the end of 2025.
“There will no longer be a fixed price period of 24 months for materials and fuel.”
The High Court in Ireland enforced two adjudicators’ decisions in McGurran Civils ROI Limited v K&J Townmore Construction Limited  IEHC 355 in a judgment which again showed the Court’s support for the adjudication process, emphasising some of the ramifications of the “pay now, argue later” principle which underpins adjudication. We consider the judgment in our briefing, available here.
In Kenny and Mullally v BGM Engineering Ltd and Creedon Construction Ltd  IEHC 368, the second-named defendant was contracted to carry out construction works for the plaintiffs. The contract was terminated with the works incomplete. The contract provided for conciliation and, failing settlement being reached, arbitration.
The second-named defendant applied for an order to stay the proceedings to allow the matter to be referred to arbitration pursuant to Article 8(1) of the UNCITRAL Model Law on International Commercial Arbitration. The Court dismissed the application on the basis that the institution of the proceedings in 2013 constituted a repudiation of the arbitration agreement and was accepted as such by the plaintiffs. The second-named defendant engaged with the pleadings and the arrangement of an engineer’s inspection. It delayed until June 2021 before asserting for the first time what it now claimed was the plaintiffs’ obligation to refer their dispute to arbitration.