Category: Uncategorized

1
AAA AMENDMENTS TO THE COMMERCIAL ARBITRATION RULES AND MEDIATION PROCEDURES
2
CLARITY IS KEY – HOW DO YOU SERVE A VALID PAY LESS NOTICE?
3
REGULATING HEAT NETWORKS:  Energy security bill to the rescue? 
4
When is a Collateral Warranty a “Construction Contract”?
5
Clarity is Key – How do you Serve a Valid Pay Less Notice?
6
Building Safety Act 2022 – What’s Changed?
7
COVID-19: EPC AND EPCM IN LARGE CONSTRUCTION PROJECTS POST COVID-19
8
K&L GATES RECOGNIZED AS A TOP CONSTRUCTION LAW FIRM BY CONSTRUCTION EXECUTIVE
9
COVID-19: UK Public Sector Construction – Cabinet Office publishes FAQs regarding PPN02/20
10
COVID-19: UK Coronavirus Act 2020 – Implications for the Construction Industry

AAA AMENDMENTS TO THE COMMERCIAL ARBITRATION RULES AND MEDIATION PROCEDURES

By: Justin Leonelli and Rich Paciaroni

Effective 1 September 2022, the American Arbitration Association (AAA) has updated its Commercial Arbitration Rules and Mediation Procedures, representing their first revisions since 1 July 2013. These amendments provide key updates and improvements to the commercial arbitration process, including with respect to the following:

CONSOLIDATION AND JOINDER

In likely the most significant revision of the amendments, under revised Rule R-8, parties can now request to consolidate arbitrations or join additional parties. The decision to permit consolidation or joinder rests with the case arbitrator (if one has been appointed) or a special arbitrator appointed by the AAA for the sole purpose of deciding consolidation or joinder. In assessing a request to consolidate, the arbitrator will consider (a) the terms and compatibility of the agreements to arbitrate, (b) applicable law, (c) whether the arbitrations raise “common issues of law or fact,” and (d) whether consolidation of the arbitrations would serve the interests of “justice and efficiency.” While consolidation and joinder have been available under the AAA’s Construction Industry Arbitration Rules for years, this is the first time such a procedure will be available under the Commercial Rules.

DISPOSITIVE MOTIONS

The amendments to Rules R-34 and R-49 now give arbitrators the ability to limit dispositive motion practice and award fees and expenses in accordance with any dispositive motion decision. Therefore, parties should be weary of excessive motions practice and confer on issues outside of formal submissions when possible.

CONFIDENTIALITY

Under new Rule R-45, the AAA has made clear that all matters relating to the arbitration and final award are confidential. Thus, attorneys and clients should be cautious publishing or disclosing any information related to ongoing or completed arbitration proceedings before the AAA. In addition, arbitrators may now issue confidentiality orders related to any matters in connection with the proceeding.

PROCEDURES FOR LARGE, COMPLEX COMMERCIAL DISPUTES

Under revised Rule R-1, the amount-in-controversy to qualify for the “Procedures for Large, Complex Commercial Disputes” has increased from US$500,000 to US$1,000,000. The key features of these procedures include, among other items, a mandatory preliminary hearing with the arbitrator(s), broad authority of arbitrator(s) to control and limit the discovery process, and a mandatory requirement that hearings take place on consecutive days to maximize efficiency and minimize costs. Moreover, absent an agreement of the parties, in order for a large complex case to qualify for a panel of three arbitrators, the amount-in-controversy must now be at least US$3,000,000 (up from the previous US$1,000,000 threshold). Otherwise, one arbitrator will hear the case.

PROCEDURES FOR EXPEDITED ARBITRATIONS

In order to qualify for the Expedited Procedures, revised Rule E-2 provides that the amount-in-controversy must not exceed US$100,000 (up from the previous US$75,000). Furthermore, the new amendments further restrict discovery in cases governed by the Expedited Procedures. Except for exchanging exhibits that each parties intends to rely on at the hearing, no further discovery is permitted unless expressly allowed by the arbitrator upon a finding of good cause.

CONDUCT OF PARTIES

The AAA’s expectations for professionalism of all participants in the arbitration have been codified at revised Rule R-2. In fact, the AAA may now decline further administration of the case if the parties’ and their representatives fail to uphold the AAA’s Standards of Conduct.

REMOTE HEARINGS

Likely as a result of the manner in which hearings took place during the COVID-19 pandemic, amended Rule R-25 now expressly allows arbitrators to conduct hearings remotely by electronic means.

IMPACT ON ONGOING ARBITRATIONS

Unless otherwise stipulated to by the parties, the recent amendments to the AAA’s Commercial Arbitration Rules and Mediation Procedures will not apply to any arbitrations initiated prior to the amendments’ effective date of 1 September 2022.

CLARITY IS KEY – HOW DO YOU SERVE A VALID PAY LESS NOTICE?

By: Kevin Greene and Ruth Chang

Advance JV (A Joint Venture between (1) Balfour Beatty Group Limited; and (2) MWH Treatment Limited); and Enisca Limited [2022] EWHC 1152 (TCC)

The parties in this case carried out works pursuant to an amended form of NEC3 Engineering and Construction Contract (Option A). The works consisted of the supply and installation of LV electrical equipment for design and construction of a new water treatment works and hydro-electric power generation facility in Cumbria.

The relevant timeline is as below.

Timeline

  • Enisca Limited (“Enisca”) submitted an application for payment (AP24) on 22 October 2021 for approximately £2.7million;
  • Advance JV (“Advance”) failed to issue a pay less notice against that application;
  • On 19 November 2021, Enisca made a further application for payment (AP25);
  • On 25 November 2021, Advance issued a pay less notice, making reference to AP 25 only.

The pay less notice issued in November made reference to AP25 only and Enisca’s argument was that no notices were issued by Advance against AP24, and as such Enisca was entitled to the notified sum (i.e. £2.7million) listed in AP24.

Advance argued that the pay less notice was a valid response to both AP24 and AP25, and that the pay less notice issued in November time indicated that Advance did not intend to make any further payment in respect of either applications.

Enisca issued an adjudication for payment of the sum in AP24 and won the adjudication.

Before the adjudicator’s decision was issued, Advance however commenced part 8 proceedings in the Technology and Construction Court (“TCC”) seeking declaratory relief in respect of the validity of the pay less notice.

Decision

The TCC held that:

1. The crux of the matter is that – or the issue is that – “how a reasonable recipient would have understood the notices”, and in this case no reasonable recipient in Enisca’s shoes would have understood, or construed the pay less notice as a response to AP24;

2. The Court will always take a common sense approach, and adopt a practical viewpoint in respect of the contents of any notice issued (as required under the Construction Act) and an unduly restrictive interpretation is not to be welcomed;

3. The TCC also rejected Advance’s argument that there was nothing in the Construction Act precluding a pay less notice from responding to two different payment applications.  The TCC responded saying this is a “novel proposition for which no support can be found” either from the wording of the Construction Act, or from the drafting of the relevant contract as between the parties;

4. The TCC reiterated that any pay less notice must make specific reference to that individual payment cycle and rejected firmly the contention put forward by Advance that the Construction Act is only aiming to regulate the time limits in serving pay less notices – that the Act did not command pay less notice to make specific reference of the relevant payment cycle in question. The TCC made this point clear in the judgment: “….. it is plain from a review of the payment regime under the Act that payment notices are required to be referable to individual payment cycles”;

5. The Court also found that, perhaps, even if the pay less notice was, as Advance argued, intended to respond to AP24, such intention was neither clear nor unambiguous, as evidenced by the parties’ overall conduct.

Analysis

This case makes it clear that a valid pay less notice must make clear reference to a particular payment notice and/ or payment application and must relate to a particular payment cycle. 

REGULATING HEAT NETWORKS:  Energy security bill to the rescue? 

By: Ben Holland and Ruth Chang

Issues with the current heat networks regime?

Heat network customers have reported price increases of up to 700% since late 2021.

Heat networks are not currently regulated, and most customers are not covered by the energy price cap (i.e. the Ofgem price-cap does not apply).

What are heat networks?

A heat network – sometimes called district heating – is a distribution system of insulated pipes that takes heat from a central source and delivers it to a number of domestic or non-domestic buildings. There are currently around 14,000 UK heat networks and half a million customers. Heat networks can cover a large area, or even an entire city, or can be fairly local supplying a small cluster of buildings. Most of the heat networks in the UK are concentrated in England (around 86%)

There are, generally, two types of heat networks: district heating and communal heating.

How does communal heating operate?

Communal heating is the supply of heat and hot water, from a source usually known as the energy centre, to a number of customers within one building only. The energy centre often consists of a single large boiler in the basement of a building with the heat and hot water distributed through the building via a series of pipes.  

About 85% of all heat networks are communal heat networks.

How does a district heating system operate?

District heating involves a local energy centre that supplies heat and hot water to customers in more than one building. District heating networks can range in size from a few hundred metres supplying just a few homes to several kilometres of pipe supplying heat and hot water to multiple buildings in a development.

What are the advantages of heat networks?

Generally the usage of heat networks will bring about these benefits:-

  • In urban areas it is cheaper to install than individual systems in each building
  • It is more resilient to fuel price shocks or individual generation assets failures
  • Easier to decarbonise
  • Delivery of cheaper heat to the end users

Who can be a heat network supplier?

The heat network supplier is the organisation that is contracted to provide heating and/or hot water to each property. They will provide the heat supply agreement (or customer charter) to each occupant on the heat network.

Various organisations can fulfil this role.  For instance:

  • A specific heat network company (ESCO);
  • Property developer;
  • Housing Association;
  • Local authority;
  • Management company; or
  • A company set up by the freeholder to operate the heat network

There are voluntary standards intended to provide consumers with some form of protection (most notably the Heat Trust scheme, which is a non-profit consumer champion for heat networks) and some standardisation around the minimum level of service customers can expect to receive from a heat network. 

Yet, looking at it on an overall terms, heat networks remain largely unregulated and dissatisfaction towards the transparency of information, or pricing aspects, or the collection of personal data, or billing and metering issues, remain some common complaints for all heat customers.

Is the government intervening (if at all)?

The recent Energy Security Bill (“the Bill”) is one of the government’s attempts in regulating heat networks.  The Bill was introduced to Parliament on 6 July 2022, aiming to deliver on the whole a cleaner more affordable and more secure energy system.

The Bill initiates important steps towards extending Ofgem’s regulatory oversight to cover heat networks. The Bill appoints Ofgem as heat networks regulator with a view to regulating heat networks, in similar ways to other utilities, with a general aim of delivering transparent information for consumers, fair and reasonable prices, minimum technical standards and  good quality services, alongside specific measures to comply with the government’s general objectives on decarbonisation. 

The Bill also provides the BEIS Secretary of State with powers to introduce various forms of price regulation, including a price cap. It also now seeks to enable heat network zoning to identify areas where there is provision for the lowest cost solution to heating buildings.

Whilst the contents of the Bill are yet to be finalised, it is expected that the relevant regulations may come into force, as soon as the earlier part of 2024 (or towards the end of 2023). However, this timeframe may prove far too late in helping the current crisis.

When is a Collateral Warranty a “Construction Contract”?

By Kevin Greene and Ruth Chang

Abbey Healthcare (Mill Hill) Limited v Simply Construct (UK) LLP [2022] EWCA Civ 823

The Court of Appeal in this case considered when a collateral warranty will be regarded as a “construction contract” under the Housing Grants, Construction and Regeneration Act 1996 (the “Construction Act”). 

The key take away points are as follows:

1.  In deciding whether a collateral warranty is deemed to be a “construction contract”, one has to look at the obligations being warranted.  If a collateral warranty seeks to guarantee obligations in relation to “past and static state of affairs” only, it is more akin to a product guarantee and will not be construed as a “construction contract”.

To provide guidance on this, the Court provided an example of such “product guarantee” wording:

“We completed these works two years ago and we warrant that they were completed in all respects in accordance with the Building Regulations…”  

2.  To qualify as a “construction contract”, the collateral warranty will have to warrant both past and future performances.

In this instance, the collateral warranty in the Abbey Healthcare case relates to both future-looking and retrospective obligations (i.e. wording of “has performed and will continue to perform” is included); hence the collateral warranty could be construed as a “construction contract”. 

In deciding this, the Court also commented that the lack of certain words (for example, “acknowledge” or “undertake”) in the relevant warranty, had little relevance in swaying the Court in finding whether the collateral warranty was a “construction contract”, or not.

3.  In regards to the “payment requirement” under the Construction Act, the Court made it clear that a collateral warranty is likely to satisfy the payment requirements under the Construction Act where the collateral warranty includes a nominal payment arrangement.

 A typical example of a nominal payment arrangement in a collateral warranty will be the inclusion of the wording ““in consideration of the payment of one pound, receipt of which is hereby acknowledged by [the party]…the deed is agreed as follows:”

4.  Assuming that the collateral warranty fulfils the above requirements, it is immaterial as to when it has been executed.   The collateral warranty can even post-date the completion of the works.

5.  The Court of Appeal also emphasised that the definition of “construction contract” under the Construction Act should be given the widest interpretation whenever possible and it is the intention of the legislature to extend access to the adjudication regime to all, whenever possible.  The adjudication regime is very effective in resolving construction disputes (in particular payment disputes) and the 28 days timeframe has proven to be beneficial to the parties on many occasions. 

Commentary

The Court of Appeal has refused permission to appeal the judgment in Abbey Healthcare to the Supreme Court.

It seems, therefore, that a collateral warranty can be a “construction contract” for the purposes of the Construction Act. This will, however, always depend on the wording of the collateral warranty in question.

This case arguably opens up the possibility of adjudication claims in respect of collateral warranties. For beneficiaries of collateral warranties (such as tenants, funders, purchasers and developers) this represents positive news but the effect of the judgment in terms of those providing collateral warranties to such beneficiaries may be that third party rights are offered instead of collateral warranties (on the basis that adjudication may not be available under such third party rights).  

Clarity is Key – How do you Serve a Valid Pay Less Notice?

By: Kevin Greene and Ruth Chang

Advance JV (A Joint Venture between (1) Balfour Beatty Group Limited; and (2) MWH Treatment Limited); and Enisca Limited [2022] EWHC 1152 (TCC)

The parties in this case carried out works pursuant to an amended form of NEC3 Engineering and Construction Contract (Option A). The works consisted of the supply and installation of LV electrical equipment for design and construction of a new water treatment works and hydro-electric power generation facility in Cumbria.

The relevant timeline is as below.

Timeline

  • Enisca Limited (“Enisca”) submitted an application for payment (AP24) on 22 October 2021 for approximately £2.7million;
  • Advance JV (“Advance”) failed to issue a pay less notice against that application;
  • On 19 November 2021, Enisca made a further application for payment (AP25);
  • On 25 November 2021, Advance issued a pay less notice, making reference to AP 25 only.

The pay less notice issued in November made reference to AP25 only and Enisca’s argument was that no notices were issued by Advance against AP24, and as such Enisca was entitled to the notified sum (i.e. £2.7million) listed in AP24.

Advance argued that the pay less notice was a valid response to both AP24 and AP25, and that the pay less notice issued in November time indicated that Advance did not intend to make any further payment in respect of either applications.

Enisca issued an adjudication for payment of the sum in AP24 and won the adjudication.

Before the adjudicator’s decision was issued, Advance however commenced part 8 proceedings in the Technology and Construction Court (“TCC”) seeking declaratory relief in respect of the validity of the pay less notice.

Decision

The TCC held that:

1. The crux of the matter is that – or the issue is that – “how a reasonable recipient would have understood the notices”, and in this case no reasonable recipient in Enisca’s shoes would have understood, or construed the pay less notice as a response to AP24;

2. The Court will always take a common sense approach, and adopt a practical viewpoint in respect of the contents of any notice issued (as required under the Construction Act) and an unduly restrictive interpretation is not to be welcomed;

3. The TCC also rejected Advance’s argument that there was nothing in the Construction Act precluding a pay less notice from responding to two different payment applications.  The TCC responded saying this is a “novel proposition for which no support can be found” either from the wording of the Construction Act, or from the drafting of the relevant contract as between the parties;

4. The TCC reiterated that any pay less notice must make specific reference to that individual payment cycle and rejected firmly the contention put forward by Advance that the Construction Act is only aiming to regulate the time limits in serving pay less notices – that the Act did not command pay less notice to make specific reference of the relevant payment cycle in question. The TCC made this point clear in the judgment: “….. it is plain from a review of the payment regime under the Act that payment notices are required to be referable to individual payment cycles”;

5. The Court also found that, perhaps, even if the pay less notice was, as Advance argued, intended to respond to AP24, such intention was neither clear nor unambiguous, as evidenced by the parties’ overall conduct.

Analysis

This case made clear that pay less notice must make clear references to a particular payment notice and/ or payment application and must relate to a particular payment cycle. 

If this level clarity is not evident in a pay less notice, the party will risk paying a lot more because of the draconian effect of not having served a valid pay less notice.

Building Safety Act 2022 – What’s Changed?

By Kevin Greene and Ruth Chang

Background

The Building Safety Bill received Royal Assent on 28 April 2022, and has now completed all the parliamentary stages in both Houses to become an Act of Parliament – i.e. the Building Safety Act 2022 (the “Act”).

According to the Government, many of the measures included within the 262-page Bill are likely to take between a year and 18 months to introduce, as the Act will require the formation of secondary legislation to support actual implementation of the measures.

Who does the Act apply to?

The provisions set out in the Act will apply to building owners and the built environment industry. This includes those who commission building work and who participate in the design and construction process, including clients, designers, consultants and contractors alike. Given the wide and far-reaching implications of the Act, potentially any parties engaged in the construction process of a building will likely be affected by the Act in one way or the other. 

Whilst the Act will cover all buildings (and not just high rise residential), measures within the Act have a special focus on higher-risk buildings which are defined as buildings that are at least 18m in height or have at least 7 storeys and have at least two residential units.  Care homes and hospitals meeting the same height threshold during design and construction will also be classified as a “higher-risk building”.

Introduction of a Building Safety Regulator

Under the Act, a new Building Safety Regulator will be responsible to carry out the following three main functions:

  • Overseeing safety and standards and performance of all buildings;
  • Helping and encouraging the built environment industry and building control professionals to improve their competence; and
  • Leading the implementation of new regulatory framework for high-rise buildings

The Building Safety Regulator is to be established by the Health and Safety Executive (“HSE”).

Introduction of concepts of “Gateways”

 Three new concepts of “Gateways” are developed and these must be satisfied before occupation of a building can take place.

Gateway one  – Planning Gateway

 Planning Gateway one will:

  • Involve the HSE becoming a statutory consultee before permission is granted for development which involves or is likely to involve a high-rise residential building in certain circumstances.
  • Require relevant applications for planning permission to include a fire statement to ensure applicants have considered fire safety issues as they relate to land use planning matters (for example, access and layout issues).
  • Help inform effective decision-making by local planning

Gateway two – Pre-construction stage

Gateway two requires the Building Safety Regulator to be satisfied that a building’s design meets the functional requirements of the Building Regulations. Construction duty holders will need to submit essential information to the Building Safety Regulator to demonstrate how the building, once built, will fulfil all the requirements of Building Regulations.

Gateway three – post completion

Gateway three takes place when construction of the building is completed, and the building control body determines whether the work has been carried out in accordance with the Building Regulations. Documents and information on the final, as-built building must be submitted to the Building Safety Regulator who will then issue a completion certificate, if and when the specified requirements are being fulfilled.

All the gateways are put in place to create ‘golden thread’ of safety information required for a building, ensuring the appropriate information is available to appropriate personnel at all times.

Introduction of New Home Warranties

All developers will be required to provide a minimum of 15 year warranty for all new build homes. 

Introduction of New Homes Ombudsman Scheme

The main proposals in the Act are to introduce a New Homes Ombudsman to serve as a system of redress and develop a code of practice with developers to set standards on sales, marketing, and the standard and quality of workmanship. All developers of new homes will be required to join the scheme.

Limitation period issues under the Defective Premises Act 1972 (“DPA”)

One of the most notable focuses of the Act relates to the limitation periods for claims brought under the DPA. The current limitation period for a claim under s1 of the DPA is 6 years from the date of practical completion of the relevant works. The Act extends the limitation period to 15 years prospectively for claims under s1 and s2A (i.e. for claims that accrue after the Act takes effect) and up to 30 years retrospectively for claims under s1 only (for claims that accrued before the Act takes effect)

The provisions to give effect to the changes concerning limitation period (as detailed above) are intended to come into force as soon as 2 months after Royal Assent.

Fire Safety remediation

The Act made clear that historic remediation obligations now rest primarily with landlords and developers, and not leaseholders.

Under the Act, house builders are firmly held liable for paying for any cladding-related remediation works, and that the Government can prevent any house builder from building homes “for any purpose” connected with “securing the safety of people or improving the standard of buildings”.  Under a scheme named “Building Safety Pledge”, under which 53 of the largest house builders in the UK are invited to sign up to this, the house builders are required to rectify any “life-critical fire safety defects” on all buildings over 11m constructed by all these developers in the last 30 years.

Currently the Act has also in place a waterfall process with regards to fixing non-cladding defects, which will see leaseholders only pay towards costs if the developers cannot be found or freeholders are unable to pay. These are, so far, capped at £15,000 for those in London and £10,000 for those outside of the capital.

Quality of construction products

Under the Act a construction products regulator will also have powers to remove any dangerous construction products from the market. 

What next?

A recent survey by Construction Management found that only 23% of construction professionals think that they and their organisations are ready for the Act.

Given this Act is representing one of the biggest overhauls in building safety regulations in nearly 40 years, construction industry stakeholders will need to come together, understand one another’s perspective and viewpoints, before each and every stakeholder will be readily available to cope with any of the challenges that may arise in complying with the Act.

COVID-19: EPC AND EPCM IN LARGE CONSTRUCTION PROJECTS POST COVID-19

Authors: Pawel Piotrowski and Nicola J. Ellis

COVID-19 has highlighted some of the existing problems in the construction market such as fragmentation, low profitability and often low satisfaction for both owners and contractors (due to time and budget overruns and lengthy claims procedures and disputes). In this article, we consider the choice of the procurement method for large construction projects and issues and risks raised by COVID-19.

EPC

Owners often procure major construction projects on a fixed price, lump sum turnkey contract whereby the contractor is responsible for all engineering, procurement and construction (EPC) aspects of the development by a specified date (subject to a limited number of circumstances which will provide the contractor with relief). Under this arrangement, the EPC contractor directly engages the supply chain and takes responsibility for building and delivering the project so that the owner simply has to ‘turn the key’. Any changes or variations that the owner may require to the original scope provided to the EPC contractor will be at the owner’s risk and therefore it is important to have a high degree of certainty and detail as to the scope of works, and often a detailed design provided by the owner to assist the EPC contractor in providing an accurate price.  

The EPC has many advantages for the owner, including that it places lower management burden on them. It provides a single point of responsibility for the project to the owner and gives the owner and any lenders a high degree of certainty as to the time and cost of the development. Since the owner has recourse against a single contractor rather than having to pursue multiple contractors and suppliers, the dispute resolution process is usually less complicated. The EPC contractor should therefore seek to pass down all main obligations from the EPC contract onto its subcontractors to mitigate its liability position.

In return for taking on a high amount of risk as to time and cost, contractors may reflect this in their pricing and may include a substantial risk premium in the contract price. Owners can mitigate this to some degree by procuring EPC contracts in competitive tenders where the lowest price is often the decisive factor. That, in turn, often results in EPC contracts carrying a risk of change orders / variations which can become very costly to the owners if agreed or potentially catastrophic to those contractors who haven’t included a sufficient risk premium when submitting a low price proposal, leading to a focus on cost control by the contractor.

In these unprecedented times, the risk of force majeure events, effects of a change in law, risk of supply chain disruptions and the risk of integrating the performance of the entire supply chain have posed a particular challenge for contractors.  As a result, contractors may become more reluctant to take on some of these risks and may seek to exclude or set parameters around their liability for such risks or owners may see tenders with higher risk premiums. 

EPCM

Where the owner wishes to retain greater control over the project, the owner may opt for an EPCM contracting structure. 

The EPCM or ‘engineering, procurement and construction management’ contract is a construction management agreement whereby the EPCM contractor is responsible for advising the client on the design and procurement of the project but also for overseeing and managing all construction and supply contracts. An EPCM contract can therefore be seen more as a professional services contract in contrast to EPC contracts which are design and construction contracts. The EPCM contractor does not perform construction work. It is the owner who directly enters into numerous contracts with various contractors and suppliers. 

EPCM has many advantages for owners, including greater flexibility allowing projects to be tailored to current conditions as owners can modify the design or procurement plan mid-project and negotiate directly with the relevant contractors or suppliers. This can mean early engagement of certain packages prior to finalising the scope of work which may result in an earlier completion date. 

The overall price of the project under an EPCM arrangement may be lower as most of the risk priced for in EPC contracts sits with the owner and the owner is able to negotiate with the supply chain itself. 

EPCM also has disadvantages. The administrative burden of the owner directly negotiating and contracting with each of the contractors or suppliers is far greater than under EPC and significant demands are placed on the owner’s skills and resources (although the EPCM contractor may be able to ease this burden). Interface risk and coordination between each contractor or supplier needs to be managed and this often sits with the owner.  Where a dispute arises, this is also more complex for the owner due to difficulties in allocating fault and risk amongst multiple contractors, rather than having a single point of responsibility as under EPC contracts.

However, from our experience, most of these disadvantages can be reduced by way of proper implementation strategy, planning, contracting and management. 

Both EPC and EPCM have advantages and disadvantages but can be beneficial when used in the right circumstances. The objectives, scope of work and risk profile should be clearly understood in choosing which method to use as the cost implications of choosing the incorrect form can be substantial for both parties. 

K&L GATES RECOGNIZED AS A TOP CONSTRUCTION LAW FIRM BY CONSTRUCTION EXECUTIVE

Construction news outlet Construction Executive has again recognized K&L Gates LLP among the top 15 firms in the publication’s rankings of the 50 leading law firms throughout the United States with dedicated construction practices.

The survey, “The Top 50 Construction Law Firms,” considered practice-specific revenue; number of lawyers in the practice; percentage of firm’s total revenues derived from its construction practice; number of states in which the firm is licensed to practice; and the year in which the construction practice was established to develop the rankings. The busiest areas of practice were also discussed; dispute resolution, construction defects, and contract documents and administration are dominating the share of legal work for firms surveyed.

K&L Gates has one of the most diverse and technically skilled construction law practices in the world, with its lawyers working with clients throughout each phase of the industry, from the early stages of finance, development, and design through implementation, construction, and project close-out. The group often partners with lawyers across practice areas such as mergers and acquisitions, labor and employment, real estate, intellectual property, and immigration to fully serve clients across the firm’s platform.

COVID-19: UK Public Sector Construction – Cabinet Office publishes FAQs regarding PPN02/20

Authors: Matthew E. Smith, Inga K. Hall, Kiran Giblin

Further to our recent blog post “COVID-19: UK Public Sector Construction – cash flow relief for suppliers” on 31 March 2020, in which we set out guidance on the Government’s Procurement Policy Note – Supplier relief due to COVID-19 PPN 02/20 (“PPN02/20”), the Cabinet Office has published a FAQs note providing further clarity and guidance regarding implementation of PPN02/20 in practice.

The 17 initial questions addressed in this FAQ note range across providing definitional clarity on terms used, further detail on how to make use of the Model Interim Payment Terms also published, the extent to which suppliers can also make use of other relief, such as via the Coronavirus Job Retention Scheme, and employers’ rights in terms of repayment, continued discharge of obligations, protection from double payments and the preservation of other contractual rights and remedies.

To read the full alert, please click here.

COVID-19: UK Coronavirus Act 2020 – Implications for the Construction Industry

 Authors: Inga K. Hall, Saya Lee

The 359-page emergency Coronavirus Bill received royal assent on 25 March 2020. This newly passed Coronavirus Act 2020 (the “Act”) contains extensive powers and additional measures to equip the UK government and other authorities to better respond to the COVID-19 outbreak in the UK. The new Act is time-limited to two years by a sunset clause (Section 89) and will be subject to six-month parliamentary reviews (Section 98)

The Act is primarily aimed at easing the burden on the frontline staff working for ‘essential services’ including the NHS, schools, police and courts, as well as providing measures for containing and slowing the spread of the virus and supporting businesses and workers. Although there are no sections in the Act specifically addressing the construction industry, the wide-ranging powers that are granted to the authorities to enable such actions and outcomes also have the potential to have an impact on the construction industry as summarised below.

For the full alert, please click here.

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