CLC call Halt on Contract Amendments

by Iain McIlwee | 24 Oct, 2024 | Main News Feed, Transformation

The Construction Leadership Council (CLC) has published a hard hitting statement calling a halt on the ongoing practice within the construction sector, of industry-approved forms of contract being amended by clients and their solicitors to introduce terms that are onerous and/or difficult to insure. This statement has been issued and is the conclusion to ongoing work through CLC Professional Indemnity Insurance Working Group.

The Construction Leadership Council (CLC), as part of the Building Safety Workstream, established a Working Group to focus on Professional Indemnity Insurance. The key objective of the group was to understand and look to address concerns over the cost, availability and limitations in insurance cover for all parts of the supply chain, from principal designer and contractor through to consultants and specialist contractors. As part this work the PII Taskforce supported an International Underwriting Association event on 31^st January 2024 entitled “Competence in the Construction Sector”. The event reviewed new regulatory requirements in the Building Safety Act. Speakers were drawn from the construction, governmental, regulatory, legal and insurance sectors with particular focus on competence requirements and how they may help to reduce risk in the construction process. Wider inference of the Building Safety Act and what can be learned from recent court cases was also covered.

An open panel debate followed looking at the implications on the insurance process. It was recognised within these discussions that, whilst the work on competence is encouraging and should help to reduce risks moving forwards and hence availability of cover. Concerns were raised over design liability being pushed deeper into the supply chain leading to confusion around accountability for design elements. It was noted in discussion that heavily amended contracts add to confusion around risk and contingent risk, impact insurability and potentially create gaps in insurance cover for specific elements (for example, interface details and fixings).

Following exchange between the Insurance Sector and representatives of the CLC confirmed that there is a need to highlight this risk. The key assertion in the statement is that “standard form building and engineering contracts and professional services contracts issued by contract-producing bodies, should be used by clients with no amendments, except where necessary in the context of project-specific risks and relationships. The CLC believes that onerous amendments make contracts unviable, reduce competition, increase risk and lead to unnecessary legal costs required to review legal liabilities created by the amendments”.

Introducing the statement Samantha Peat, Chair of the CLC PII Working Group said:

“A sensible approach will simplify risk allocation, give clarity to the project team and their PII providers, and address the concerns for which the CLC PII Working Group was originally formed, namely, to address concerns about cost and efficacy of Professional Indemnity Insurance in Construction. It will also support the focus on accountability, competence and the need for better information management called for by Dame Judith Hackitt and enshrined within the Building Safety Act and the wider reform of the Building Regulations.”

FIS CEO Iain McIlwee responded:

“This is a massive statement from the Construction Leadership Council – we have to stop this routine amendment of the standard contracts.

This statement echoes the long held concerns of the FIS Community and I would like to personally thank Samantha Peat and colleagues in this Working Group for the amount of time that has gone in to establishing the forum and drawing the right people together to have the open and pragmatic discussion with the insurance industry that has resulted in this clear an unambiguous statement.

We have a legislative process that focusses on duty and a contractual process that focusses on passing the buck – this is bound to create tension. Boundaries need to be reset or we are left with impossible problems, uninsured elements and ultimately the potential for stranded assets and uninsured buildings. T

his is Leadership and we applaud the CLC and supporting representatives from the Insurance Sector for taking a strong line. The statement in itself will not change the world, but what we do with it can. For me the clear message here empowers the Responsible No by starting to spotlight the Irresponsible Ask. Contract amends are at the heart of the cultural concerns in construction – change is inevitable and has I believe been catalysed today”

The full statement can be read here.

Through the FIS Responsible No Campaign, the organisation is offering subsidised contract reviews and asking members to report (particularly public sector) contracts that are subject to heavy amends and also provide details of Irresponsible Contractual Clauses so that FIS can address behaviours directly with the client. You can find out more about the FIS Responsible No Campaign here.

FIS Extends the Responsible No to include PQQ Systems

by Iain McIlwee | 23 Oct, 2024 | Main News Feed

FIS has, since it’s outset supported the introduction of the Common Assessment Standard. This new approach was launched in 2019 by Build UK and the Civil Engineering Contractors Association following concerns that the proliferation of suppliers and duplication of effort and support associated with pre-qualification schemes. Through it’s introduction, the claim was that this approach will help the industry to £1bn by eradicating duplicate fees and inefficiencies.

The overall impact, whilst positive (over 22,000 companies now have the accreditation and a growing number of companies have formally adopted use) has not met the ambition and for this reason FIS is adding a Common Assessment call to action to the Responsible No campaign. Underpinning why this is important FIS CEO, Iain McIlwee stated:

“The Responsible No isn’t about digging our heels in, but starting to identify and address behaviours and processes that are barriers to better. This is a clear example of that. The waste here in fees and time is obvious, we have collectively agreed as an industry a better approach and implemented a new standard to do this. We all need to do our bit in helping to raise awareness and normalise this new approach. The reality is we can’t blame people for not doing stuff they may not know about or understand – this is all about helping to identify and explain why something is an Irresponsible Ask.

This is a particularly important time for this intervention with the use of PQQs being linked to new requirements for Organisational Capability enshrined in the Building Regulations and the potential for further proliferation as businesses look for angles to make more money rather than support a collective effort.”

To support this effort, FIS have prepared new guidance on the Common Assessment Standard for members and also a template email to recommend adoption on projects where a particular Pre Qualification scheme is listed as required. Where there is continued resistance to adoption, FIS has also set up a whistleblowing process to enable members to help FIS identify any resistance so that this can be understood and hopefully addressed moving forward.

Finally FIS is asking members to help take stock of where we are now at in terms of impact of the Common Assessment Standard by completing the FIS Pre Qualification Impact Survey here. Information will be used to support this collective effort and to help deliver change.

The FIS Common Assessment Standard Toolkit is available here

You can find more information on the FIS Responsible No Campaign here

Saving Lives: The Critical Importance of Defibrillator Training and Awareness

by Oscar Venus | 21 Oct, 2024 | Health and Safety, Main News Feed

In readiness for Restart a Heart Day, the FIS (Finishes & Interiors Sector) team undertook Basic Life Saving training to understand what to do when faced with an emergency situation. Here, Hermione Neale, FIS Marketing Apprentice, highlights what the team learnt and how early defibrillation can save lives.

In this article, I will cover the effectiveness of defibs, the action to take in an emergency, what CPR (Cardiopulmonary Resuscitation) is, The Circuit and how to access defibrillators, storage of defibrillators, number of first aiders, statistics and Cardiac Awareness week.

Giving people a chance

Statistics show that using a defibrillator within the first minute can have a survival rate as high as 90%, however every minute that passes after this, the survival rate drops by 10%. This proves the effectiveness of defibrillators and how much of a difference they can make in saving lives. With manual compressions the survival rate is between 5-10%, with 1 in 10 people surviving resuscitation.

CPR (Cardiopulmonary Resuscitation) is rescue breaths and compressions in an attempt to bring back the patient’s heartbeat and breathing. CPR (Cardiopulmonary Resuscitation) is different for adults, children over a year and infants under a year. A defibrillator is a device used to restore a regular heartbeat by an electric current.

In the case of an emergency check your surroundings for danger, begin compressions, call 999, call for a defibrillator, turn on the defibrillator, cut off clothing covering chest, place pads as shown, follow defibrillators verbal instructions, if there are signs of responsiveness place them in the recovery position and monitor.

Finding a Defib

The Circuit is the national defibrillator network that is used by the 14 ambulance services across the UK. This allows ambulance services to locate the nearest defibrillator upon arrival of a cardiac arrest. These defibrillators are connected to each of the 14 ambulance services and there are an estimated 90,000 defibrillators currently in the UK. Through calling 999, the operator can tell you where the nearest defibrillator is and then what the code to access it is.

Defibrillators should be stored in a case to protect it from damage and the recommended temperature range is between 0 to 50 degrees. The AED needs to be kept within this temperature range due to the adhesive gel on the pads melting and not sticking to the patient properly, therefore preventing the electrical shock from getting to the heart. In the winter months the defibrillator should be stored in a heated outdoor cabinet. Defibrillators should be checked every day including the batteries to ensure that the defibrillator is ready for use.

It could be you

Every year in Britain, 30,000 people have cardiac arrests outside of a hospital and statistics show that 1 in 10 patients survive due to lack of education and training. 72% of cardiac arrests happen at home and 15% happen at a workplace. Half of out of hospital cardiac arrests are witnessed by a bystander and 7 out of 10 attempt CPR (Cardiopulmonary Resuscitation). However, public defibrillator use is reported at being used less than 1 in 10. The average ambulance response time is 6.9 minutes, which means by the time a call is made and the wait time for the ambulance, the patients survival rate from defibrillation will have dropped by 70%. In 2018, 59% of the public were trained in CPR (Cardiopulmonary Resuscitation) training, however only 19% knew how to use an AED, which means that the chance of cardiac arrest patients has a significantly lower chance of survival.

In a workplace with 25 employees, the minimum legal requirement is one appointed first aider.

This information and statistics show how important informative first aid is to the survival rate of cardiac arrests. It is important for employers to take the time to train their employees and ensure they all have awareness surrounding cardiac arrests, the signs and how to use a defibrillator.

Restart a Heart Day

Restart A Heart Day took place on the 16 October. The Day helps raise awareness of cardiac arrests. This program encourages confidence in CPR (Cardiopulmonary Resuscitation) practice and allowing them to learn lifesaving skills. The focus for this year’s Restart A Heart Day was to aid equal access to defibrillators, which will increase the chance of survival rates. This is now an internationally celebrated day.

Preventing deaths from cardiac arrest

Find out more and see some key questions and answers

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Government takes action to back small businesses and tackle late payments

by Iain McIlwee | 11 Oct, 2024 | Contractual and Legal, Main News Feed, Transformation

The government announce the introduction of tougher measures to tackle late payments to small businesses.

Secretary of State Minister Jonathan Reynolds has set down his commitment to:

foster a strong payment culture in the UK by bringing the payment performance and behaviour of large companies more clearly into focus.

The Minister confirmed intent to lay secondary legislation “in this parliamentary session” to make it a requirement for large companies to extend information requirements about their payment performance in their Annual Reports. Changes will include the additional requirement to report on value of invoices outstanding and, for construction firms, their practices, policies and performance with respect to retention clauses in any qualifying construction contracts with suppliers. The measures are intended to increase transparency around the payment practices of large businesses and bring them into focus for boards and investors.

The Minister also confirmed that Government will be launching a new supercharged Fair Payment Code to be overseen by the Small Business Commissioner (a voluntary code of best practice for companies committed to fair and fast payments that can be set as a procurement requirement). This will replace the existing Prompt Payment Code, with a clearer and more measurable set of ambitious commitments and will be a further lever to improve the UK’s business payment culture by shining a light on the best performers.

The Department for Business and Trade will also be launching a public consultation “within months” on additional legislative measures to address late payments and long payment terms to ensure improvements in payment times, especially for small businesses and the self-employed.

The Small Business Commissioner, Liz Barclay, said:

I am delighted to announce a new Fair Payment Code will be launched this autumn. The new code will reward businesses that treat their suppliers fairly and pay them quickly. It will also include an ambitious new Gold Award which aims to make 30-day payments the new standard for which businesses can aim.

We need sustainable, resilient businesses at all levels of the supply chains, to achieve the growth the economy needs. That means paying everyone from the largest supplier to the sole trader quicker, so they have the confidence to invest, improve productivity and grow. Fair payment terms and on time payments are the key.

Responding to the announcements FIS CEO, Iain McIlwee said:

The measures on reporting are welcome and mirror the work we supported with the last Government and recently wrote to the Construction Minister (Sarah Jones) to ensure that they did not get lost in the change. The reality is that better measurement will help to isolate the problem, but further consultation and action is required to solve it. We can’t wait for the data to tell us what we already know. The problems the Minister is looking to address are hiding in plain sight.- we only need to look to the spate of recent insolvencies and particularly the devastation caused by the failure of ISG to see the ultimate impact.

We also welcome the changes to the Prompt Payment Code. FIS has worked closely with Liz Barclay and found her to be a powerful advocate for the SME and we will be doing all we can to support Liz in this work and ensuring that the Prompt Payment Code is front and centre on all Public Sector Jobs and principals starts to resonate with Responsible Clients in the private sector too.

FIS will be drawing on the Manifesto already issued to the Construction Minister as the mainstay of our response. Key recommendations included in this document are:

NEAR TERM LEVERS (which have been addressed in above):

More robust enforcement of the duty to report legislation: Improvements to the Payment Practices and Performance (Amendment) Regulations announced in Autumn 2023 are positive, but
need to be backed by effective enforcement. To date there has been no enforcement of the duty to report, and the Prompt Payment Code has not been backed with sufficient resources to deliver the intended changes. The Office of the Small Business Commissioner needs more authority and resource to support effective enforcement.

LONGER TERM LEVERS
Reform of the Construction Act is required
The process surrounding application, due dates and pay less notices needs to be simplified to ensure that they cannot be abused. Drawing on international comparisons, the Irish Construction Contracts Act provides for a 30-day payment period from the date at which the payment claim is submitted. This is far simpler than the ‘due date’ referenced in the UK Construction Act, which relies on supplementary information in the contract that can be distorted. There is also less room within the Irish legislation to extend payment terms in a subcontract agreement.

The Construction Act should be amended to ensure retentions are automatically released at the defined date. They should not require additional applications from contractors or relate to dates that are not explicitly related to the completion of their works.

Equally, retention money should be held in trust; it cannot be forgotten that Carillion wiped out £700m of retentions held against the supply chain. Consideration should be given to replicating the recent developments in New Zealand where it has been legislated that retentions are held in trust.

Where Collateral Warranties are held, retentions should be immediately and automatically returned.

The process and cost of adjudication also needs to be considered. Costs will be eased by greater clarity in the Act on payments and better use of standard contracts. Adjudication decisions should be binding to
help avoid costly legal costs/

Make interest on late payment compulsary
New EU regulations require compulsory interest payments to be automatically applied to late payment and accrued until payment of the debt. This makes non payment a liability as opposed to an enforcement right that an embattled supply chain is disinclined to impose.

If you have any views on payment reform that you feel should be reflected in FIS Lobbying work, please email iainmcilwee@thefis.org

The FIS Manifesto can be viewed here

Enhancing Risk Management: Exclusive Insurance Solutions

by Oscar Venus | 3 Oct, 2024 | Main News Feed

At FIS, we understand the importance of providing robust insurance support to our members, which is why FIS is partnered with Construction Shield, a leader in insurance consulting.

This collaboration opens up a wealth of opportunities for our members to assess their current coverage efficiently. With the expertise of Construction Shield, you can now evaluate the effectiveness of your existing insurance policies and identify areas for improvement. Not only can you gain insights into your current coverage, but you’ll also have access to alternative quotes that could better suit your specific needs.

In our ongoing effort to keep costs at a minimum for our members, we are excited to announce that FIS will waive any commission fees associated with this service. This means that you can benefit from Construction Shield’s expertise without worrying about additional costs. Instead, the savings generated from this partnership will be rebared direct to the member.

Making a Difference

Find out how our partnerships can help you

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Update on ISG: Construction Leadership Council Speaks out

by Iain McIlwee | 21 Sep, 2024 | Main News Feed

Following confirmation that ISG Group and all subsidiaries are entering administration the Construction Leadership Council Convened a meeting and has published the following statement

“This morning, the Construction Leadership Council convened a meeting between key construction trade bodies, education and skills providers and the Department for Business and Trade to discuss how industry should respond to ISG filing a notice to enter administration.

Our sympathies are with everyone across the industry who is directly or indirectly affected by the administration of ISG, and the CLC’s objective is to ensure that individuals and organisations impacted are given the appropriate support and guidance, and that as far as possible the effect on the wider sector is limited.

The CLC is collating detailed guidance available for those impacted and in the interim, we would advise everyone in the industry to ensure that they are managing any impact on their businesses within the terms of existing contracts, ensure that where possible payments are made promptly to suppliers and to await further information. If companies are in particular financial distress, we would encourage them to contact their relevant industry body.”

For the apprentices and graduates who are directly employed by ISG, Build UK and the CITB have established a working group to ensure that placements can be found for as many people as possible. If you or someone you know is an apprentice or graduate directly employed by ISG, please contact info@builduk.org in the first instance.

FIS will circulate this guidance as soon as it is available, but in the meantime, we refer members to the key points from our update on Thursday:

When you are able to access site (do adhere to timings provided) recover any plant, site accommodation and any records that are currently on the sites. You should avoid at all costs any damage to your completed works.
if you are able, take photographic, video and written records of your work in progress.
Accurate and detailed records will be invaluable in establishing the value of your “final account” and can be used for any negotiations with main contractor who is brought in to complete the contract.
You should prepare a schedule that shows a record of all outstanding payments including retentions and when these payments were due
If you’re currently in possession of materials that are required for the contract but have not been delivered to the site then make careful note of these.

FIS contract and legal advisors are on hand to help and some have offered additional pro bono support to members to help review contracts to ensure you are clear on your contractual position with respect to an administration event and e.g. understand Step in Rights from clients. If you need advice please send your contracts to iainmcilwee@thefis.org and we will look to undertake a targeted contract review.

We have had a number of questions with respect to Project Bank Accounts, these should protect and ringfence any monies due – certified payments should progress. Any applications will need to be certified and could be subject to a delay. Clients will be looking to appoint a contractor to replace ISG. How they are able to progress the project and the impact on existing sub contractors will depend on the contract and funding. We will be working with CLC and pressing clients to manage transition with sensitivity to the impact on the incumbent suppliers.

Members impacted are advised to do a cash forecast and, if the situation with ISG is forecast to cause serious financial difficulties, then we have specialist advisors available to assist you and provide guidance.

We would also ask members to send us in confidence details of the contract they are working on, size of the contract and monies owed (certified, a valuation of any completed works currently uncertified and retention).

For ease of capture we have set up a short survey for members to complete (all information will be gathered in confidence).

Our legal toolkit is here and you can call the FIS helplines on 0121 707 0077 or can email iainmcilwee@thefis.org for assistance.