Project Scotland

Comment

Report has “significant” implications for industry

Kathryn Moffett

By Kathryn Moffett, lawyer and construction law specialist at CMS

THE Cole Report was published last month following a number of high profile construction defects which were discovered in Edinburgh schools and other public buildings.

The report is critical of the Private Finance Initiative (PFI) funding model which has been regularly used to fund infrastructure projects and is likely to have significant implications on Scotland’s construction industry going forward.

The 250-page Report made a number of recommendations for the council, private and public bodies and the wider construction industry in relation to procurement, construction, training and recruitment, the role of the building standards and independent certifiers and the sharing of information.

The Scottish Government and regulatory bodies are certain to pay close attention to these recommendations. It also highlighted that the defects may not be confined to the buildings identified so far, suggesting it is highly possible that the same issues are present in others which contain large masonry panels, including those which are required to be tied back to a structural frame.

This view has also been shared by the Royal Incorporation of Architects in Scotland (RIAS) which has called or all public buildings constructed in the 21st century to be urgently inspected to assess the potential dangers from major latent defects.

The report makes it clear that the Scottish construction industry needs to develop better means for building inspectors to have open and transparent access so they can make the best possible assessment of a building’s safety. It also recommends a much greater burden on public sector clients in terms of their statutory duties in ensuring the safety of the public buildings they procure.

Acknowledging the boom and bust nature of the construction industry and the many challenges this creates in maintaining highly skilled tradesmen, the report also focuses on the need for greater training and recruitment.

Whether the UK Government’s plans to introduce an Apprenticeship Levy in April will help companies achieve this aim remains to be seen.

In the meantime, it’s important for construction firms to ensure they are suitably geared up to deliver the highest standards on public sector building projects and have appropriate administrative procedures in place to cope with any potential issues arising from such contracts.

In terms of managing issues arising, this starts with good record keeping. Along with careful maintenance of any contractual documents, it is also useful to keep a record of all variation instructions by the client so that any change can be evidenced along with accompanying payment requests.

Documents related to design such as drawings and as built information are useful in the event of any defects claims.

Given the length of time liability can last under a contract (up to 20 years in Scotland), a system to keep records for the relevant length of time is essential.

It is also important for companies to ensure they are not unduly exposed in terms of liability, another area where the Cole Report has recommended greater clarity.

Where possible, negotiating a cap in relation to liability on a contract is advisable although it will usually depend on the nature of the project as to whether a client will agree to this.

In the event of any serious issues arising in a building project it is important to firstly engage with your client as this approach can often produce a remedial solution and spare both sides from a full legal dispute.

If a claim can’t be avoided, it’s important to be proactive and engage with your insurers, legal adviser and technical experts as early as possible.

With the publication of the Cole Report, there is now an even greater onus on contractors which are responsible for the construction and maintenance of public buildings.

They will need to ensure they are fully prepared for the tighter compliance regime that is highly likely to follow.

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