Construction Law Update: 2015 Review
09 February 2016
The Construction Industry in Ireland continues to recover. There is now an urgent need to increase construction activity, particularly in the office and residential sectors. We explore some of the legal considerations impacting new builds.
Key topics in 2015 included:
In 2015, a number of initiatives were introduced at national level to boost activity and assist the Construction industry as it continues to grow. The review of the Irish Government form of contract is ongoing and the amendments are expected early in the new year. The Construction Payments legislation is still making its way through the legislative process bringing with it the introduction of Adjudication as a means of resolving construction disputes. The debate surrounding the new Building Control Regulations intensified with the introduction by the government of an opt out for one off houses and domestic projects.
It is over a year since the Government published the Review of the Performance of the Public Works Contracts. A number of interim changes were proposed aimed at redressing the allocation of risk between the Employer and the Contractor and reducing the level of disputes arising on public works contracts. The Government Contracts Committee held a series of information sessions in the summer on the proposed amendments and heard from a variety of industry stakeholders. It is understood that amendments will be published early in the new year. The four key changes proposed at this stage are:
- make the bill of quantities the primary reference document for tender purposes;
- direct tendering of specialist works packages where the specialist element makes up over 15% of the works;
- adopt a “most economically advantageous tender” (“MEAT”) basis for awarding contracts over €2 million which takes into account quality criteria and pricing; and
- new dispute resolution procedures including the introduction of management escalation procedures prior to conciliation and the idea of a nominated conciliator.
The long awaited Construction Contracts Act 2013 (the "Act") aims to provide certainty of payment to Contractors and introduces adjudication as a fast track means of resolving construction payment disputes. Once in force, it will introduce statutory adjudication for payment disputes in construction contracts. Statutory adjudication will apply to contracts with a value in excess of €10,000, excluding most private residential contracts. Any party in the contractual chain, except suppliers unless also responsible for installation, can refer a claim concerning payment to adjudication. A decision will be given within 28 days, with an extension of up to 14 days if the parties agree. The decision of the adjudicator will be binding until finally settled by the parties or determined differently either by a court or by arbitration.
Dr Nael Bunni has been appointed as the Chairman of the Panel of Adjudicators. The selection process for the Panel of Adjudicators was carried out over the last couple of months and a panel of adjudicators has been sent to the Government for approval. It is understood that the Code of Practice is currently being drafted, as are rules of court, to provide for the enforcement of adjudicators decisions.
The Building Control (Amendment) Regulations 2014 (the "BCAR") created a new legislative regime of statutory inspection and certification of new buildings and extensions. BCAR provide for certification of design and materials at commencement, construction and completion and introduce a new professional role of Assigned Certifier with responsibility for co-ordinating inspections throughout construction.
The introduction of the regulations was hotly contested in the industry. In September 2015, the government responded to the debate by introducing amending regulations focusing on one-off dwellings and domestic extensions. There is now an opt-out available for people carrying out either one-off dwellings or domestic extensions. The amendments were greeted with some surprise. It seems they focused only on the apparent increased professional fees required for compliance with BCAR. They did not deal with the concerns voiced by the industry concerning increased liability or the lack of an independent form of building inspection. The changes will result in a two tier system of building control where some projects comply with the new standards while others voluntarily opt out of compliance.
It can only be hoped that the continued improvement in the economy will mean resources will at some point be made available to introduce a proper independent form of building inspection and control.
The construction industry is continuing to recover, and most stakeholders report significantly increased levels of activity and employment. Demand far exceeds supply, particularly of office accommodation and housing. The industry will take its place once again as an important player in the Irish economy. The industry must ensure that the changes proposed as part of the review of the public works contracts are implemented and that the medium and long-term changes identified are progressed. The system of open information sessions is to be welcomed and will hopefully continue. The Construction Contracts Act 2013 must finally be implemented in 2016. The debate concerning BCAR will continue but for now the new regime appears to have settled despite the unfortunate introduction of a two-tier system and one hopes we will start to move towards independent building control.
For more information, please contact a member of our Construction Law team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.