It has been a busy time for the construction industry as the economy begins to pick up and a growth in activity levels across a range of sectors brings new opportunities for industry players. This wave of development is taking place against a backdrop of increased regulation and changes to industry practice.
Construction Contracts Acts
The end of the lengthy process to bring the Construction Contracts Act 2013 into effect appears to be in sight. On October 20 2014 Minister for Business and Employment Ged Nash assumed responsibility for implementation of the act. Despite a meeting with industry stakeholders to update them on progress in late December 2014, it was not until the unveiling of Dr Nael Bunni as chair of the panel of adjudicators in May 2015 that there was a true sense that the steps required to implement the act were actually happening. In August 2015 the competition for the appointment of adjudicators to the panel was published – the closing date for applications was September 18 2015. Putting a panel in place is likely to take a further two months.
The Code of Practice is also being revised (some substantial changes to the draft code issued in March 2014 are expected) and a Code of Conduct for adjudicators is being developed – what this will contain is as yet unknown. All adjudicators are required to comply with both codes. In addition, discussions are expected to introduce new court rules to facilitate efficient procedures for the enforcement of adjudicators' decisions.
Notwithstanding all that needs to take place, it is possible that a commencement order may be issued before the end of 2015 but even at that, any implementation is likely to require a lead-in period – for example, that the act will apply only to construction contracts entered into after the date likely to be sometime in Spring 2016.
Building Control (Amendment) Regulations
In June 2015 a review of the operation of the regulations was announced, with a particular focus on self-build and exemptions to the certification process. A new set of amendment regulations followed quickly and was signed into law on August 31 2015, becoming effective the following day. The Building Control (Amendment) (No 2) Regulations 2015 provide for owners of certain developments (single dwellings, single unit developments or extensions to dwellings) to opt out of the regulations' certification process by making a statutory declaration, which includes a statement that the owner understands its statutory obligation to ensure that the design and construction still comply with applicable building regulations. If opting out, the owner must still appoint a builder, but it can consider taking the role of builder itself in accordance with Article 5(7) (a).
While the development clearly seeks to ease the burden on homeowners and self-builders, it will undoubtedly lead to a two-tier system where certain properties will not carry the benefit of certification under the regulations. The impact on the value and ease of resale of such properties should be considered carefully when opting out.
Construction Industry Register
The Construction Industry Register Ireland(1) was launched in July 2014, with an aim of promoting standards in the construction industry and public confidence. The register works in tandem with the regulations, with the statutory certificates making reference to the builder's Construction Industry Ireland Register number. While applications to join the new register have been high, registration is not yet compulsory. Despite repeated indications that the register will be put on a statutory footing in 2015, there is no concrete indication as to what this statutory footing might look like or whether there will be exemptions or exceptions for certain entities. It is now increasingly likely that this next step will not happen until 2016.
On February 11 2014 the Council of the European Union adopted three new procurement directives into law (relating to public procurement, utilities and concessions). These directives replace the existing directives and must be transposed into law by April 2016 (with e-procurement provisions to be transposed by September 2018).
The the directives aim to:
- simplify the procurement process;
- increase access for small and medium-sized enterprises;
- create more flexibility in the system; and
- achieve some common societal goals (eg, protection of the environment and social responsibility).
The directives leave the government a number of policy choices in their implementation – including in such areas as e-procurement and social issues. As a result, discourse is expected in the next six months on what the final regulations should look like. The directives have been almost completely transposed for England and Wales and Northern Ireland, and this may influence discussions as to how transposition is approached.
While it remains to be seen when the government will achieve transposition, there should be ample opportunity to build awareness of the changes coming down the line and how they will affect businesses as either procurer or bidder.
Meanwhile, a recent Supreme Court decision(2) led to the amendment of existing remedies regulations in April 2015. This enables contracting authorities to apply at interim or interlocutory stages for an order lifting any automatic suspension and entered into effect following the initiation of a challenge to the procurement process.
Public works contracts
Following a year-long review of the Public Works Contract, the Office of Government Procurement issued its report in December 2014 setting out proposed changes to the office. The report focuses on achieving a more realistic allocation of risk, while ensuring cost certainty for public authorities (something which the existing suite of contracts has been accused of failing to do). The main interim measures proposed are as follows:
- rebalanced risk allocation (away from contractors) by reintroducing the Bill of Quantities as a core contract document (Interim Measure 1);
- direct tendering of specialist works packages in particular circumstances (Interim Measure 2);
- greater concentration on quality criteria in the award process for works contracts (Interim Measure 3); and
- an overhaul in dispute resolution mechanisms (allowing for the inclusion of informal dispute resolution methods to reduce the volume of more formal dispute referrals) (Interim Measure 4).
On April 15 2015, following further engagement with industry stakeholders, the Office of Government Procurement issued details as to how the interim measures will be implemented. Interim Measures 1, 2 and 4 were intended to be included in the new forms of contract to be published in June 2015. However, the timetable slipped once again, but it is hoped that the new contracts may be published before the end of 2015. A working group including industry stakeholders is considering Interim Measure 3 and has yet to report on it.
Once these changes have been implemented, the report envisages further engagement with stakeholders in the medium term to prepare a strategy for 2016 and beyond. As a result of these proposals, there will be good opportunities during 2015 and 2016 to engage with the Office of Government Procurement and helpt to shape the future procurement of public works projects.
Business information modelling
Following on from the UK government's support for building information modelling (BIM) in public contracts in recent years, can similar support be expected from the Irish government? There is clearly an appetite to utilise BIM in public contracts, with the Office of Government Procurement report December 2014 referring to it as a "powerful risk management tool" and calling for BIM to be mandatory for "projects of a certain scale and complexity". Despite numerous calls from stakeholders to bring BIM into the public works contracts, the report suggests that utilising BIM is considered to be a medium-term goal and not something to be rolled out straight away. BIM is already regularly used on projects procured using the public-private partnership model.
The adoption of BIM is still evolving. However, we can expect to see it used on an increasing number of projects in both the public and private sectors.
After a period of gloom and despondency, it is heartening to see an increase in activity in the construction sector and real optimism about a brighter, more measured future. That this is combined with new regulation in the sector is no bad thing, but the breadth of the changes means that all players must keep up to speed with the changes and their likely implementation dates. A lot has happened over the past 12 months and further changes can be expected during 2016.
For further information on this topic please contact Mary Liz Mahony at Arthur Cox by telephone (+353 1 618 0000) or email (email@example.com). The Arthur Cox website can be accessed at www.arthurcox.com.
(1) See www.ciri.ie.
(2) OCS One Complete Solution Limited v Dublin Airport Authority plc,  IESC 6.
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