Construction Law November 2020

Editor’s comment
Lowest price obsession hasn’t gone away
The Cabinet Office has announced new measures to deliver social value through public procurement in ‘a new Policy Note. Editor Nick Barrett says it is time for stronger commitment from government that chasing lowest prices is no longer the priority.

News
This month’s news roundup highlights late payment as the top issue facing suppliers to public bodies. It also includes detail on a new building safety competence regime and international arbitration rules set to come into force next year.

Legal terms explained
Emma Kurtovich and Matthew Procter of Herbert Smith Freehills explain what is meant by termination.

Guest editor
Design life obligations: hidden liability traps?
Guest Editors Andrew Croft and Kevin Henderson of Beale & Company Solicitors LLP warn of potential hidden liability traps with the growing use of design life obligations in contracts.

Legislation state of play table
Our regular round up of the progress of legislation affecting construction as it passes through legislatures comes from Dentons UK and Middle East LLP. Mark Macaulay comments on a new Government Procurement Policy Note that promotes social value in bid assessments.

Reports from the courts
Our regular review of the court designs of most relevance to construction comes from Andrew Croft and Ben Spannuth of Beale & Company Solicitors LLP, focussing on a case which serves as a reminder of the courts’ approach to strike-out and summary judgment applications; and another that highlights the courts’ robust support of the ‘pay now, argue later’ principle of the Construction Act.

Analysis
Grenfell tragedy driving procurement change
The Grenfell Tower tragedy on 14 June 2017 in which 72 people lost their lives has set in motion what will be fundamental changes in the regulatory regime surrounding building regulations in the UK. Nick Barrett looks at the key procurement lessons that are emerging from the public inquiry, which could result in equally fundamental changes to how suppliers of construction services are appointed.

CL guides
Variations
In our latest Construction Law Guide series article from DLA Piper Tamara Preuss describes how the often tricky issues surrounding variations are treated under contracts. Not all instructions give rise to a variation, she warns.

Contracts
Intra-EU Investment Treaties – do they still provide protection?
Vijay Bange and Matthew Friedlander of Duane Morris explain why Bilateral Investment Treaties are important and how moves within the European Union to end them threaten key protections that contractors and others might think they enjoy. Crucial ‘Sunset Clauses’ could fail to be honoured.

Insolvency
Digital Early Warning Systems reduce insolvency risk
South African based project organisational behaviour specialist Anton Krause and UK construction risk management consultant Stephen Woodward describe how adopting digital early warning systems can help avoid situations like the Carillion scandal arising.

Collaboration
Risk allocation in the face of Covid-19
Lucy Chadwick and Kathryn Patel of Eversheds Sutherland consider the Construction Leadership Council’s paper ‘Covid-19: Contractual Disputes & Collaboration Guidance’, offering practical advice to the paper’s recommendations when drafting construction contacts.

Covid-19
Some Covid-19 impacts are here for good
Giovanni Di Folco of Techno Engineering & Associates Group and Laura Lintott of Dentons UK and Middle East LLP compare their experiences of remote working since March 2020 and the effect of the Covid-19 pandemic on dispute resolution procedures.

Insurance
Financial loss claims
Insurance expert John D Wright of JD Risk Associates explains financial loss claims, focussing on why Covid-19 is likely to throw up more litigation in this area. Understanding is not helped by insurers and lawyers using different terms to describe the same risks.

Alternative dispute resolution
Preparation is the key to success in giving evidence remotely
In our latest ADR series article Tracey Summerell of Dentons UK and Middle East LLP considers new guidance for experts and instructing lawyers on how to prepare and give evidence in virtual and remote hearings.

Flammable insulation sold using wrong test report, Inquiry hears

Kingspan sold its Kooltherm K15 insulation to the construction sector for over 14 years using a fire test report for an older version of the product, despite this being “common knowledge” within the firm, the Grenfell Tower Inquiry has heard.

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Spending boost demands more collaboration

Next stages of government’s promised ‘infrastructure revolution’ were revealed this week when Chancellor of the Exchequer Rishi Sunak set out plans for £100Bn of capital investment over the next year at the Spending Review.

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More detail urged in draft Building Safety Bill

Key aspects of the new building safety regime proposed in the wake of the Grenfell Tower Fire are lacking in detail and must be expanded upon within the draft Building Safety Bill, pre-legislative scrutiny has found.

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Infrastructure strategy targets private investment but rejects PFI

Construction lawyers and leading industry figures have broadly welcomed the long awaited publication of government’s National Infrastructure Strategy, which came alongside the Chancellor’s Spending Review announcement this week.

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Major projects suffer from message failure

Government and other promoters of major infrastructure have failed to communicate the importance of these programmes to the public who do not understand the benefits they would deliver, according to a survey of Members of Parliament.

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Early cost estimates hit project performance

Over reliance on early cost and schedule estimates to set target budgets and completion dates is driving detrimental behaviours on major public construction projects, according to a report exploring the root causes of common problems affecting schemes. The National Audit Office report raises a number of interesting learning points that have relevance to all infrastructure projects, one lawyer comments.

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Grenfell insulation supplier ‘dishonest’ and ‘unethical’, Inquiry hears

Celotex – the manufacturer of a flammable insulation product used on Grenfell Tower – acted “dishonestly” and in ways that were “completely unethical” in marketing its product to the construction industry, a former employee has claimed.

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Brexit related risk fears follow government warning

Top actions that construction firms should be taking to prepare for the end of the Brexit transition period have been set out by the government, with just over a month now remaining until new rules on importing, exporting and recruitment come into force. A key issue for projects will be how Brexit related risks have been allocated contractually between the parties, one lawyer emphasises.

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Deaths of rail workers prompt safety demands

Network Rail must improve its safe work planning processes and the monitoring and supervision of track maintenance staff after failing to adequately improve protection from moving trains over many years, a report into the death of two workers last year has urged.

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High Court rejects challenge to planning reforms

A Judicial Review application from campaigners attempting to overturn substantial reforms made to permitted development rights by the government has been dismissed by the High Court.

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