Construction
The Construction Industry in Ireland has changed dramatically in the last number of years. Output in the industry decreased sharply from a peak of €38 billion in 2007 to a projected €7 billion for 201. Notwithstanding this dramatic contraction there are still many opportunities in the Irish Construction Industry. A significant area of growth over the coming years will relate to water infrastructure. Ireland lags considerably behind its European counterparts in terms of its water systems. Furthermore, Ireland is obliged under the terms of the IMF rescue package to commence charging for water usage. Infrastucture works on a massive scale will therefore be required over the coming years. Other areas of growth will be waste infrastructure as well as renewable forms of energy and the associated works to facilitate grid connection.
Much of these infrastructure works will be centrally funded. There is a suite of documents known as the GCCC contracts in Ireland which must be used where a project is funded mainly from central funds. There are five main forms of contract together with consultant appointments, tender guidelines and forms of sub contract. The contracts are obligatory where more than half of the funding is coming from the central exchequer. There are rules and guidelines and therefore input from local professionals is required in determining whether this form of contract must be used. These are fixed price lump sum contracts which pass much of the risk to contractors. The contracts contain stringent notification and reporting requirements which must be strictly adhered to. It is highly advisable therefore to seek local professional advice before entering such contracts and also in managing them. Our Construction team has vast experience dealing with these contracts and can assist clients in the preparation, review and negotiation of contracts.
Investors undertaking privately funded projects in Ireland will usually encounter one of two forms of
construction contract. The first is the Royal Institute of Architects of Ireland (RIAI) 2002 edition which is used for building projects. The contract is well established and provides an understood mechanism for dealing with risk sharing, division of roles, dispute resolution, collateral warranties and delay and disruption. Sub contractors are usually engaged under the Construction Industry Federation (CIF) Sub Contract 5th Edition. The second form of contract encountered is the Institute of Engineers of Ireland (IEI) form of contract which is primarily used in civil projects and is therefore less common since the introduction of the new government form of contracts (below). Both the FIDIC international forms and the JCT contracts are often encountered in Irish construction projects. Contracts are usually heavily amended and therefore it is essential to seek local advice prior to entering contracts.
Like most of Europe, Public Private Partnerships (PPP) are widely used in Ireland and have been used as the mechanism to fund most large infrastructural projects here. Many of the bidding consortia have overseas participants. The award by the Irish government of such contracts is governed by EU procurement legislation and the thresholds set out in the releavnt EU directives will apply. We regularly can advise clients through all stages of the procurement process.
The recent turmoil in the construction industry has inevitably led to an increased number of disputes. The majority of construction contracts used in Ireland provide for conciliation and arbitration as an alternative means of dispute resolution. In recent times, however, an increasing number of construction disputes are being dealt with by way of traditional litigation as a result either of the fact that no contracts are in place or the fact that debts exist which can only be dealt with by way of litigation. A Construction Contracts Bill is currently in the legislative process. If enacted it will see the introduction of Adjudication as a mandatory form of dispute resolution in construction contracts. This draft legislation is largely based on the UK legislation.
Our Commercial Litigation team have extensive experience in dealing with construction
disputes and assists clients in managing and resolving disputes as early as possible and in the most
cost effective manner possible.
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