The compelling case for Deferral of Building Control (Amendment) Regulation (SI.9 of 2014)

by bregs blog admin team

There is widespread concern regarding the timing of the introduction of the Building Control (Amendment) Regulations, S.I.9 of 2014 and potential consequences for the building industry and public projects. 

Background

The Building Control (Amendment) Regulations, 2014, S.I. 9 of 2014, was signed into law earlier in January 2014.  Two separate Senior Councils have examined previous versions (SI.80 of 2013) and found the wording of the regulation to have serious liability issues with consequences for Professional Indemnity Insurers.  The Minister and his officials started a process to review some wording in late 2013 and published a revised document (S.I.9 of 2014) which was circulated late Thursday the 16th January and which retained the same implementation date, the 1st March 2014.

Basis for concern

The new Regulations mark a significant change in the way building projects are managed and a new regime of certification, documentation and records is involved. Many of the fundamental systems that are necessary to achieve a proper and realistic implementation of S.I.9 on the 1st March are not in place and are unlikely to be in place for several months. The fear is that the confusion and problems that will inevitably arise in the absence of readiness will lead to delay in the roll out of badly needed projects, contractual claims from Contractors which may be difficult to defend against and reputational damage to our building control system with consequent impact on Foreign Direct Investment.  In essence, with the best will in the world and with every party working together, it is not possible for all those involved and affected to be ready in time.

Main issues.

• The new inspection and certification regimes will need to be provided for in all forms of Building Contract.  The two principle forms of contract (GCCC and RIAI) have yet to be amended.  For example, it is thought that 14 clauses in the standard RIAI Contract will have to be amended or rewritten.   These revised forms of Contract are not ready and will not be ready in time.  Ad hoc clauses will probably be drafted as stop gap measures but that is a high-risk way of dealing with building contracts.  New or revised forms of building contracts have to be extensively scenario tested a checked to ensure risk if positioned where it belongs.  This cannot be achieved before the 1st of March.

• In order to procure valid and reliable tenders, the exact details of the contract that a successful tenderer will be asked to sign need to be included in the Tender Documents.  Many private and public sector projects out to tender at present but do not have the relevant contract clauses or the new requirements for Builders, Suppliers and Sub-contractors in relation to certification.    The tender documents are unavoidably incorrect or incomplete, delays will ensue as these issues are trashed out before a Contractor can be appointed and in many cases there is a risk of the tender award being challenged..

• Client procurement of the Design Certifier and Assigned Certifier.  These roles do not exist at present.  Where Design Teams are currently appointed on public projects, the issue of compliance with procurement rules will arise.  This issue does not seem to be in the process of being addressed and typically takes several months to complete.

• Inspection Plan. The Assigned Certifier is obliged to prepare an Inspection Plan before construction commences.  This plan may have cost implications for the Contractor and arguably should to be a tender document.  Negotiations with the preferred tenderer once the Plan is done will inevitably take time; the alternative is to proceed with the contract and deal with contractual claims for delay afterwards.

• Building Control Authorities will have to manage a large amount of documentation at various stages of the new process.  It was intended that a national I.T. system would be in place in all BCAs to handle this and much good work has been done, led by David O’Connor in Fingal County Council, to progress this.  Unfortunately the systems aren’t yet ready and haven’t been road tested.  Many BCAs have only one Building Control Officer and s/he has not been trained in the operation of the new Regulations.  Without systems to ensure a steam-lined administration, delays, confusion and frustration are guaranteed

• Practical Completion.  Normally defined as being when the building can be used for the purpose it was designed, this will fundamentally be changed with the new Completion Certificate.  The building will now be capable of being used for the purpose it was designed when the Completion Certificate is accepted by the BCA.  In an environment where the local Building Control Officer is under resourced and trying to deal with completely new systems and extensive amounts of documentation, it is foreseeable that delays will occur.  These delays will be seen as intolerable by many international companies central to the recovery.

Foreseeable consequences

Hiatus.  A significant hiatus in the Construction Industry is foreseeable in both private and public sectors.  Anecdotally, this is already happening with some project tenders being delayed until there is more clarity.  This risk arises as tender processes already in train need to be revisited and tender processes about to start do not yet have the necessary contract forms to be referenced.  Further delays will occur as the two principles Certifier appointments are advertised or negotiated.

Confusion, Disputes and Litigation.  

In an environment where people are not prepared properly, an ordered and controlled process cannot be realised.  The resultant confusion is breeding ground for disputes, litigation and unwelcomed reputational damage to the building process in Ireland, which is already well down in the World Bank’s ratings.  A significant number of GCCC projects are already in some sort of dispute resolution process.  The premature implementation of these Regulations will increase the areas of risk in the Contracts and will have financial and delay implications for many important projects.

Solution

Defer the implementation date.  There is no one calling for the regulations to be introduced  by the 1st March and many calling for postponement to ensure readiness.  It is the general belief that all stakeholders in this matter would welcome a deferred implementation date.  What could be achieved during the time allowed by deferral?

• An implementation task group can be quickly set up with various stakeholders involved to coordinate the preparation and development / completion of systems.

• Agree a realistic end date from the liaison groups dealing with GCCC and RIAI contracts and ensure all work towards that target.

• Road-test IT systems and scenario-test procedures to anticipate problems, especially in the FDI and Public Sectors.

Conclusion

No one is ready for this and it would be reckless on many fronts to proceed knowing this to be the case. The logical conclusion is that the date for implementation would be put back and it is likely that no one will object and most will welcome this at all levels and in all sectors. Time is not on our side and action is needed quickly but the goal of avoiding foreseeable significant problems is worth achieving. The industry, taxpayer and consumer need deferral of SI.9.

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