UK: Construction News Round-Up

Last Updated: 23 February 2016
Article by Alastair Young, John Woolley, Jane Miles, Robert Turner and Shaun Tame

Our construction news round-up covers a range of regulatory, industry and contractual issues that affect UK construction businesses.

Fines increase for corporate manslaughter

Following a public consultation, the Sentencing Council has issued new guidelines for the sentencing of health and safety offences and corporate manslaughter. Their aim is "to ensure a consistent, fair and proportionate approach to sentencing organisations or individuals convicted of corporate manslaughter, health and safety and food safety and hygiene offences". The guidelines came into force on 1 February 2016. For more information, see the Sentencing Council press release, 3 November 2015, or contact Sam Boileau.

Construction contract news

  • The Joint Contracts Tribunal (JCT) has released an update on its forthcoming JCT 2016 edition of contracts. The update can be found here and provides a list of some of the changes we can expect to see including changes to improve the functionality and user-friendliness of the suite of contracts, the simplification and revision of payment provisions and other provisions relating to, for example: the CDM regulations 2015, the Public Contracts Regulations 2015, fair payment, interim valuation dates, the grant of performance bonds and parent company guarantees and the granting of third party rights by sub-contractors as an alternative to obtaining collateral warranties from them.
  • The NEC has published "early contractor involvement" clauses for use with the NEC3 Engineering and Construction Contract (ECC). A guide to their use is expected to be issued by the NEC shortly but, for now, the clauses can be downloaded from the NEC site here.

    For further information about the use of these clauses, please contact John Woolley, Jane Miles or Shaun Tame.
  • The Joint Contracts Tribunal (JCT) has released a Building Information Modelling (BIM) practice note which "considers BIM in the construction industry and how BIM's methodologies and principles are applied. The use of BIM as part of Collaborative and Integrated Team Working is also considered". Produced by the JCT's BIM Working Group, the practice note is designed to help those new to or unfamiliar with the concept of BIM to understand it better.
  • The Chartered Institute of Building (CIOB) has published its Time and Cost Management Contract, 2015 edition (TCM15). This is a revised edition of the CIOB's contract for use with complex projects, published in 2013 (CPC 2013). It encourages the contractor, its sub-contractors and design consultants to collaborate with the time manager, the cost manager, the contract administrator and the employer by constantly monitoring and discussing risks so that the consequences of time and cost risks can be avoided by timely action.
  • Parts 1 and 2 of RICS Property Measurement, 1st edition (which was published in May 2015 and incorporates the RICS Code of Measuring Practice, 6th edition and the International Property Measurement Standards (IPMS)), became mandatory for the measurement of office buildings on 1 January 2016. For more information, visit the RICS website.
  • On 12 November 2015, The Hon. Sir Vivian Ramsey delivered the JCT Povey lecture on "UK standard forms of contract: Are the cultural and legal concepts of such contracts applicable internationally?". Click here to access the notes.

Draft regulations for payments under the CIS

  • The HMRC has published draft regulations that relax the test for when a sub-contractor should be permitted to receive payments gross under the CIS. A consultation on the draft regulations ended on 22 January 2016 and the regulations will come into force on 6 April 2016.

House building: Cutting Red Tape and the Consumer Code for Home Builders

  • The Cabinet Office, the Department for Communities and Local Government (DCLG) and BIS have been collating comments as part of the Cutting Red Tape review of house building "to identify and remove unnecessary regulatory barriers to growth and associated costs to the house building sector, while ensuring necessary protections are maintained". In addition, the government wants to review the changes made by the Construction (Design and Management) Regulations 2015 (SI 2015/51) and examples of EU rules that are considered too strictly implemented. Those interested in the house building industry can read more here.
  • The government has also been reviewing the Consumer Code for Home Builders, which was launched in September 2015. The consultation closed on 31 October 2015 and, following the review of the responses, any changes agreed are due to be implemented in 2017.

Regulations and industry practice update

  • The consultation by the DCLG on a proposed new Part R to the Building Regulations 2010 concerning high speed electronic communications networks closed on 11 January 2016. The new Part R would affect the Building Regulations 2010 (SI 2010/2214). As the DCLG explains on its consultation webpage: "This consultation will inform the approach we will take to implement Article 8 of the 2014 Broadband Cost Reduction Directive that requires all new buildings and major renovations to have in-building physical infrastructure which supports connections to superfast broadband. We are planning to meet this requirement by introducing a new 'Requirement R1 – In-Building Physical Infrastructure' to the Building Regulations." The feedback on the consultation is now under review.
  • The Considerate Constructors Scheme, founded in 1997 to improve the image of the construction industry, has launched a programme to confer "Ultra Sites" status on those who take considerate construction to the highest level. The programme sets a new level of industry standards and collaboration among clients, contractors, sub-contractors and suppliers. It is hoped that the new programme will increase collaboration and raise industry standards throughout the construction supply chain and it is currently being piloted by a consortium of some of the country's leading construction organisations. For more information, click here.

Procurement contracts update (including new thresholds)

The thresholds for the application of the public procurement rules have been updated to implement a European Commission Regulation. The changes, which were made to reflect fluctuations in foreign exchange rates etc. (see below), became effective on 1 January 2016 and will apply until 31 December 2017. Please note that, when assessing whether a contract would be subject to the public procurement regime, the relevant figure excludes VAT.

Public Contracts Regulations 2015

Supplies

Services

Works

Central government bodies, as listed in Schedule One to the Public Contracts Regulations 2015

£106,047

£106,047

£4,104,394

Other public sector contracting authorities

£164,176

£164,176

£4,104,394

Social and other specific services

N/A

£589,148

N/A

Subsidised contracts

N/A

£164,176

£4,104,394

Utilities Contracts Regulations 2006

Supplies

Services

Works

All regulated sectors

£328,352

£328,352

£4,104,394


Other public contract news:

  • In addition to the change to the financial thresholds: 2016 promises a number of other significant developments in the field of public procurement. There will be a substantially revised set of regulations covering procurement in the utilities sector. There will also be new regulations specifically covering works concessions and services concessions (services concession were previously not regulated by UK law, although they were subject to rules derived from the EU Treaty principles). Further updates on these important changes will follow during the course of the year.
  • The government has issued Procurement Policy Note (PPN) 16/15: procuring steel in major projects, which explains how government buyers should source steel for major projects in a more strategic and transparent way. This PPN applies to all central government departments, their executive agencies and non-departmental public bodies and should be circulated to those with a purchasing role. It applies to any infrastructure, construction or other major procurement project with a significant steel component, where the overall project requirement has a capital value of £10 million or above. Supporting this PPN is an additional guidance note: Steel procurement in major projects: guidance on the application of social issues, which gives practical guidance on how to incorporate social issues in major projects with a significant steel component.

For further information, please contact Mark Bassett or one of the team listed on the right.

Environmental update: the carbon challenge

  • In a recent article, Sam Boileau considered the carbon challenge and how emission reduction schemes may affect property lenders. Commercial property is now subject to a range of EU-wide and UK domestic law aimed at reducing carbon emissions. These laws raise important questions for those lending against property. For example: could certain properties become less attractive to target tenants? Will properties require costly energy efficiency upgrade works? Could property sales therefore become more complicated and costly (whether pre- or post-insolvency)? All of these issues may have an impact on value, and on the adequacy of a property as security throughout the life of a loan facility.
  • Click here to read more on schemes that may bring unavoidable costs for certain owners and users of property: Energy Performance Certificates; the CRC Energy Efficiency Scheme and the Energy Savings Opportunity Scheme as well as brief details of the key voluntary schemes which the government has introduced to encourage low carbon activities.
  • For further information, contactSam Boileau or Helen Bowdren.

For more information on any of the above, please contact one of the team listed on the right.

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