What legal enablers are required to deliver the Construction Leadership Council’s Roadmap to Recovery?
The Construction Leadership Council’s (CLC’s) plans for a post-covid-19 revival of the UK construction sector were published on 1 June and set out a three-phase recovery over two years, the Roadmap to Recovery. The CLC has acknowledged that the sector was not in great shape going into the covid-19 crisis, with many of Mark Farmer’s targets in his 2016 report, Modernise or Die, still work in progress, including digital transformation and widespread use of modern methods of construction.
The Roadmap aims to create a more capable, productive and profitable construction sector that delivers better value to clients and better-performing infrastructure and buildings, and which competes successfully in a global market. Failure to act risks the construction industry lapsing into a longer-term recession that will erode capability and skills.
We are currently in the Roadmap’s first phase, which targets increasing output, maximising employment and minimising disruption. The CLC envisages this phase will last three months, but with many sites still far from back to 100% productivity it may well last longer.
The second phase aims to drive demand, increase productivity and strengthen the supply chain over the following five months, while the third aims to transform the industry, deliver better value, collaboration and partnership.
Each phase highlights behaviours between the parties on construction projects as being a key part of the recovery plan, with an obvious focus on collaboration and avoidance of disputes. So can construction contracts and procurement practice help or hinder the recovery process?
To avoid disputes, the Roadmap recommends adoption of the RICS’s Conflict Avoidance Pledge and to seek adjudication through the most cost-effective process
Phase 1: Restart
The emphasis of this phase is on getting projects back on site and avoiding time and energy being lost in dispute. For clients and contractors who have not yet agreed what the impact of covid-19 is on their projects, the CLC recommends its guide to responsible contractual behaviour to navigate a way through standard form building contracts. If the contract does not deal adequately with the situation, then agreeing variation agreements to properly document the negotiated position can also minimise the risk of a dispute in future.
Decisions to be taken during this phase include impact on the completion date (and anticipating future restrictions), agreeing if additional costs are payable as a result of public health guidance and changes in site operating procedures, and potentially changes to materials due to restrictions on supply.
Restart also places emphasis on prompt payment to support the supply chain, and this has been embodied in government guidance in Procurement Policy Notes 02/20 and 04/20. In order to avoid disputes, the Roadmap recommends adoption of the Conflict Avoidance Pledge, a non-binding charter published by the RICS, and to seek adjudication through the most cost-effective process.
It is at the procurement stage that other commitments to improve the sector can be targeted, including adoption of modern methods of construction, digital technology and data sharing
Phase 2: Reset
This phase seeks to encourage new ways of working to embed better, more collaborative business models and contractual terms to respond to covid-19, including more flexible and fairer contractual and payment terms. While no specific mention is made of changes in procurement practice, it is assumed the kick-start needed to embed better contractual terms must begin with the selection of the project team.
It is at the procurement stage that other commitments to improve the sector can be targeted, including adoption of modern methods of construction, digital technology and data sharing, not to mention targets to achieve net zero carbon and obligations to develop construction skills and retain apprentices.
The second phase of the Roadmap will coincide with the implementation of legislation to improve the safety of all new buildings, with a particular focus on high-rise residential buildings. The Fire Safety Bill and the Building Safety Bill will reform building regulations and place greater duties on developers and contractors, so it is essential for any new project procured over the next 12 months to specify and price these new obligations.
If the plan is adopted by the sector, we are likely to see greater use of alliancing and partnering contracts
Phase 3: Reinvent
This phase will concentrate on building stronger partnerships between the industry and its clients, supply chain firms and investment in upskilling the workforce. Here the use of alliancing models is specifically mentioned and, if the plan is adopted by the sector, we are likely to see greater use of alliancing and partnering contracts such as the ACA suite of alliance forms including the Framework Alliance Contract, FAC 1, already used on central government frameworks, to create long-term strategic partnerships, and use of project contracts that embody supply chain collaboration such as the Term Alliance Contract, TAC 1 and Option X12 of the NEC suite.
Contract forms and procurement practice will form an important part of the recovery process to hopefully reset behaviours and mitigate the adoption of adversarial positions.
Stephanie Canham is national head of projects and construction at Trowers & Hamlins