Outside glass view of RPC building.

The Week That Was - 11 March 2022

Published on 11 March 2022

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

Storm Damage

The UK endured three severe storms with Storm Dudley hitting the UK on 16 and 17 February; Storm Eunice following on 18 February; and finally Storm Franklin on 20 February.  With these storms bringing unprecedented wind speeds of up to 122mph in some areas, widespread damage has been recorded across the UK. This has led to UK Insurers receiving an increased number of calls reporting damage to property as a result of the weather.  For some businesses this has meant losses extending beyond physical damage to losses from interruption to business.  Mohammed Khan, the General Insurance Leader at PwC UK has said that ‘based on the high winds which have led to damage to homes and commercial buildings plus extensive travel disruptions, we estimate that the insurance losses for Storm Eunice will be between £200 million to £350 million’.  

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Smaller housing firms concerned carbon proposals will ‘break’ them

Many SMEs are worried that the proposed Part Z amendments to building regulations, which would introduce mandatory limits on carbon emissions in projects.  If implemented, firms would be obliged to measure, report and reduce a scheme’s carbon emissions during the design process.  Whilst many larger companies have welcomed these climate-focused proposals, smaller companies are worried about the extra costs that would be involved in making the schemes compliant. The individuals who drafted the proposals have said the proposals achieve a balance between ambition and deliverability, and that many of their elements are intended to reduce costs, although they added that the final values of the requirements for projects have not yet been finalised and would be revised through public consultation. 

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Infrastructure and Projects Authority issues practical guidance note on PFI expiry

On 28 February 2022, the Infrastructure and Projects Authority (IPA) has published new guidance on the expiry of PFI contracts and transition process with the aim of ensuring public services are fit for purpose.  

Matthew Vickerstaff, the Director of Finance for IPA has said:

“These particular contracts deliver a wide range of vital public services and with many of these due to expire within the next 10 years, the government is committed to supporting a successful end of contract process.  I would like to encourage PFI contracting authorities to utilise this practical guidance to help prepare for the specific challenges of the process and moving seamlessly into the future services provision.”  

The guidance note covers: why PFI contract expiry matters; how to approach PFI contract expiry; how to implement PFI contract expiry; and key recommendations such as planning for expiry at least 7 years before expiration.  

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NEC publishes guidance on early contractor involvement

The NEC has published a practice note on Early Contractor Involvement Contracts, which includes guidance on using secondary option X22 (early contractor involvement) of the NEC4 Engineering and Construction Contract (ECC).  The aim of this clause is to allow Contractors to be involved in the decision-making process earlier on in the lifetime of projects.

The note explains what using this secondary option will entail and its potential benefits.  It also provides advice on procurement best practice, and setting the target price for the second stage of the contract.   

The decision to publish this practice note reflects the growing popularity of two-stage tendering in the UK construction market.

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Friends of the Earth granted permission for judicial review of UK Net Zero Strategy 

Friends of the Earth has been granted permission for a judicial review of the Government's Net Zero Strategy and its Heating and Building Strategy.

The Net Zero Strategy, presented in October 2021, does not clearly show the level of carbon emissions that will be cut by each proposal or policy, or when each cut will be achieved.  Friends of the Earth has argued that this is contrary to Section 4 of the Climate Change Act, which requires five-yearly carbon budgets.

Friends of the Earth has also successfully argued that the Heating and Building Strategy, presented at the same time, failed to consider the impact on protected groups such as the elderly, the young, those living with disabilities and ethnic minorities.

The government will have to address the arguments at a judicial review hearing later in 2022.

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Thanks to Ciara Stewart, Jessica Yates and Rakesh Pandit for contributing to this week's edition.

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