The Week That Was - 1 July 2022

Welcome to The Week That Was, a round-up of key events in the construction sector over the last seven days.

No easing for professional indemnity insurance restrictions 

A second annual survey by Construction Leadership Council's PII group has revealed that many firms are still finding their insurance includes wide-ranging exclusions, as well as high premiums and excess levels.  This is despite the fact that the vast majority of work done by the respondents does not relate to high rise residential buildings.

The survey also revealed (amongst other things) that around a quarter of respondents had lost jobs as a result of having inadequate PI insurance and 68% of respondents had restrictions on fire safety cover.

Chair of CLC PII group has said: “The market conditions for PII cover remain extremely tough for construction firms, particularly SMEs, and in the light of energy price rises and materials inflation, these are worrying times.  The CLC PII Group will continue to work with Government and insurers to  try and ease the situation.”

You can read more here and view the full results of the survey here.

Plans to cut carbon in projects to be reconsidered by Government

 Proposals to cut carbon emissions in construction projects are being re-considered, after previously being mothballed.  Conservative MP Jerome Mayhew has reintroduced a private member’s bill to parliament which would place mandatory limits on carbon at the design stage of projects. 

The Carbon Emission (Buildings) Bill (the "Bill") was originally proposed by Tory MP Duncan Baker in February but was withdrawn in March after he was appointed to a new role in the housing department.  The revival of the Bill follows the publishing of the cross-party Environmental Audit Committee's report calling for the government to make carbon assessments for buildings mandatory. The Bill is based on the Part Z initiative which proposes that all projects larger than 1,000sqm, or 10 dwellings, must assess and report their whole-life carbon.

Read more here. 

Cost of repair under assigned collateral warranty not too remote

In the case of Orchard Plaza Management Company Ltd v Balfour Beatty Regional Construction Ltd [2022] EWHC 1490 (TCC), the Claimant obtained rights under an assigned collateral warranty in relation to a development in Poole.  

They subsequently brought a claim seeking to recover the cost of remedial works. The Claimant then made an application to obtain strike out and/or summary judgment in respect of part of the Defendant's defence.  They pleaded that the loss claimed was too remote on the grounds that the warranty was issued to a funder and only losses that would usually be recoverable by a funder should be recoverable by the Claimant.

The Judge decided that the likelihood of the Claimant having incur these remedial costs was within the reasonable contemplation of the Defendant when the warranty was concluded.  The Claimant's application was therefore successful and the remoteness part of the Defendant's defence failed.

Read more here.

Construction product availability improving but costs spiralling     

The Construction Leadership Council's most recent Product Availability Statement has confirmed that the product availability across the sector is generally improving.

However, the statements notes that the average inflation for construction products and material is around 23% (even higher for energy intensive products), and prices are expected to increase further during the second half of this year.

It is also reported that a key risk for the industry remains recruitment, retention and wage inflation, with some SMEs reluctant to take on projects as they do not have the necessary tradespeople. 

You can read the full statement here.

Government relaxes new certificate rules

 The government has announced that it will relax new certification rules on construction products in order to ease the transition to the new testing regime.  

The new testing regime has been introduced following UK's departure from the EU.  It will mean that products sold in the UK must be certified to meet the new UKCA mark, which is the UK's own version of the EU's CE safety and quality assurance mark.

The new measures announced this week will allow products that have been CE marked to be imported into the UK before the end of 2022 and sold on without being re-certified with the new UKCA mark.  Spare parts will also be accepted into the country without additional certification where they comply with the same requirements which were in place at the time the original product was sold.

You can read more here.

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice.  We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date.  You should seek legal or other professional advice before acting or relying on any of the content