Construction contracting has seen significant change in both the private and public sectors, including the introduction of the long-awaited reform of the Public Works Contracts and a definitive date for the operation of the Construction Contracts Act 2013. The act applies to a wide range of construction contracts, including main contracts, subcontracts and professional team appointments entered into after July 25 2016.
Limitation of liability is a hotly negotiated issue in most commercial construction contracts. Parties often rely on the standard form clauses as being tried and tested and drafted with the benefit of industry knowledge. Such reliance can prove hazardous, as it may not adequately deal with the commercial risks of a particular project. Exclusion clauses that significantly limit parties' liability by way of financial caps are generally useful.
Support for building information modelling (BIM) is gathering pace. BIM is regarded as a powerful risk and cost management tool, encouraging better collaboration and improved project delivery. Contractors are already utilising BIM to help them to gain competitive advantage in the marketplace. Critics believe that specific BIM clauses and terms should be incorporated into the contract to help avoid potential disputes.
It has been a busy time for the construction industry as the economy picks up and growth in activity levels across a range of sectors brings new opportunities. This new wave of development is taking place alongside regulations and changes to industry practice. New regulation in the sector is welcome, but the breadth of the changes means that all players must keep up to speed with them.
The Office of Government Procurement has published its Report on the Review of the Performance of the Public Works Contract, setting out its conclusions following the long-awaited review. While the report acknowledges what does not work and what must be addressed in the contracts, it will be the action taken to implement the identified measures that will reveal whether it can change the landscape of public sector contracting.
The Construction Contracts Act 2013 introduced a number of key protections aimed at improving cash flow in the construction industry, including an adequate payment mechanism in all construction contracts. The introduction of the right for parties to refer disputes relating to payment to adjudication has the potential to revolutionise dispute resolution under construction contracts.
A new version of the Arbitration Rules for use with the Public Works suite of contracts was recently published on the Construction Procurement Reform website. The new rules must be used with all applicable contracts awarded subsequent to a tender deadline of January 24 2014. The rules are welcomed in their approach to certain issues, but other features are more questionable.
As construction industry members and practitioners were preparing for the Building Control (Amendment) Regulations 2013 to become operative, the Building Control (Amendment) Regulations 2014 were signed into law. The 2014 regulations refine and clarify changes introduced by the 2013 regulations and address some of the more controversial elements.
The main objectives of the Safety, Health and Welfare at Work (Construction) Regulations 2013 are to fully transpose the requirements of the Mobile Sites Directive and reduce the regulatory and administrative burdens while maintaining health and safety standards. In line with the directive, the regulations apply to a person having construction work carried out on his or her own home.
Two recent High Court cases have considered the position of parties with regard to a contractual entitlement to arbitrate a dispute. Both decisions, which involved construction disputes, provide guidance on how the courts apply the Arbitration Act depending on the actions of the parties to the underlying dispute.
Once the Construction Contracts Act becomes enforceable it will make pay-when-paid clauses ineffective except in limited circumstances concerning the insolvency of the ultimate paying party. Consequently, the main contractor will effectively bear the risk of funding the project.
The Construction Contracts Bill was recently passed and will soon become law, providing a much-needed boost for the Irish construction industry. The industry will now have a piece of legislation that, although not perfect, should revolutionise dispute resolution and ensure that payment practices which inhibit cash flow become a thing of the past.
The Building Control (Amendment) Regulations 2013 have been recently signed into law. The regulations introduce a substantial number of changes, including the revision of the commencement notice and the introduction of three new types of mandatory certificate. The most controversial elements have been removed. Notwithstanding the changes, the new regulations still present a challenge to the construction industry.
The Irish High Court has upheld the binding nature of a conciliator's recommendation and acknowledged the mandatory nature of conciliation as a first step in the dispute resolution process under the Royal Institute of the Architects of Ireland (RIAI) contract. The judgment is a seminal decision in Irish construction law since there is little precedent on the RIAI form of contract.
With the downturn in the economy, the construction sector has had to deal with the fall-out of key stakeholders finding themselves in real financial difficulties, which many have been unable to survive. So what are the issues that parties should be aware of when a developer or contractor goes bust? How do the standard form contracts manage such a scenario? What rights or obligations does an employer or contractor have?
The Public Works Contracts in Ireland adopt an approach which seeks to pass as much risk as possible to the contractor for checking the accuracy of all information which may be provided. Changes made in the latest version of the Public Works Contracts have reinforced this philosophy. Contractors will need to be mindful of this additional risk and will now have the additional challenge of factoring this into their pricing.
At times when money and resources are constrained, legal costs are at the forefront of clients' minds. However, there are some ways in which parties to construction and engineering contracts can reduce their potential costs exposure when dispute resolution proceedings are unavoidable. Alternative dispute resolution and early case settlement strategies should be promoted at every possible juncture.
Construction contracts commonly used in Ireland do not normally include any express reference to latent defects or state the period for which a contractor shall be liable for them. When a party suffers loss or damage arising from a latent defect to a building or structure, it may pursue damages by either suing in contract or tort, or pursuing claims under both the law of contract and negligence.
More than four years after the introduction of the Public Works Contracts, parties are now familiar with their provisions. But are they aware of the various amendments that are made to these contracts on a regular basis? Several versions of the contracts have been issued since their first publication, incorporating a range of amendments to their provisions. However, many of these changes are not fully advertised.
Since its introduction in May 2010, the Construction Contracts Bill has received widespread support, from both the previous and current governing administrations. Some recent amendments to the bill are significant in terms of its scope and effect, and it is to be hoped that some of the anomalies which exist in the current drafting will be dealt with during the bill's passage through the Dáil.