Spec Finish

“This doesn’t work, it’s never worked and, in some cases, it perpetuates negative behaviour at every stage of the supply chain, people will go in at lowest price costs and the profit is found in the variation and the revaluation.” But to drive improvement in the market, specialist contractors in our sector need to understand what actually marks success for the client so that they can price on products that will do the job the client wants. This can only happen though when the contractor is able to question the client in detail. Ideally, there should be scope in the tender process to enforce earlier engagement. Silver lining: Ann predicts that the most successful companies will be those who understand the value they deliver and don’t try and be all things to all men. She thinks we will see more frameworks, more longer-established supply chains that build deeper relationships because more specialist companies work better with other specialist companies that they already know, trust and understand. Fourth speaker, James Reid, Construction Shield spoke on: ‘Changing risks – insuring construction – a risky business?’ There has been a shift in the attitude of the insurance sector to construction and a growing uptake of professional indemnity insurance, but we have also seen price increasing and restrictive endorsements creeping in. So how must the sector react to this to ensure that we work closely with the risk engineers in the insurance sector and don’t hit an insurance crisis? James said that the insurance sector’s current view of construction has changed over recent years; partly because of the continuing distress of the construction industry with rates hardening and some well publicised losses and tragedies. He said: “This has led the insurance industry to ask for greater disclosure and transparency between what clients are showing the insurance companies and a degree of distrust on both sides. “The challenges facing the fit-out sector when it comes to buying the correct insurance cover is meaningful engagement with insurers. It is imperative to spend time and resource in identifying your risk exposures and really understanding what insurance you need because this provides the insurance company with the confidence that your risk is being well managed.” There is a temptation to ‘write out accountability’ in a contract and FIS sees some fairly onerous endorsements creeping in, particularly around fire safety, that are difficult to interpret and this could present additional risk to FIS members. FIS advice also is flag up renewal dates and look at them as early as you possibly can avoiding difficult decisions to be made at the 11 th hour and impacting to works in progress if it has been left too late. Silver lining: Use the new FIS tools, which have been developed to work for the fit-out community, and demonstrate to the insurance industry that FIS is adoptingmore effective riskmanagement throughout the supply chain. Final speaker was Dave Bebb, Fenwick Elliott, who spoke about: ‘Changing contracts – how can we unpick the contractual mess?’ We can’t talk about change unless we go back to the contract, so are the days of the standard contract dead, with reams of amendments undermining the core principle or are we on the cusp of the great realisation that risk mitigation and management are often diametrically opposed? Dave has been a construction lawyer for the past 20 years and said that in his experience, construction contracts haven’t changed much in all that time, what happens on site is very different from what the contracts might say. There is still a culture of patching up the risk and passing it down. The public sector has tried to make some progress into the collaborative nature of contracts, but the private sector still lags behind. Contracts don’t really reflect what the parties do, which is something a contract should do. Types of contracts haven’t changes either; they fall into two categories: 1. rushed, last minute contracts that are too long – probably a JCT with 100 pages of amendments to it than no-one has the time to read; and 2. small print in size four font on the back of the purchase order part, that again, no-one could read even if they had the time to do so. The major problem, particularly for fit-out is that contracts are left until the last minute. Anecdotally, the number of contracts that start on site with a formal contract in place is very few, because that isn’t the client’s priority. FIS plans to survey its members to get a clear picture of how they view contracts and how they feel they need to evolve and change. Legislation will change contracts because the Construction Act says it has to change. It has already changed the way payments are made, the right to adjudicate, the right to suspend work and current contracts have to reflect this. In time, the Building Safety Bill will drive changes to building contracts – accountability will become much clearer and although the Bill will be far more prescriptive in the areas of high risk building, it will start to define ‘reasonable’ and accountability levels, particularly around competence across the whole of the construction industry. If contractors are being forced into a project where they feel the risks haven’t been adequately addressed, they should have the confidence to challenge the contract they are given. Reflecting commercial risk and critical to standard building contracts now though is to always include something about COVID, which is already caught in JCTs under force majeure (unforeseeable circumstances that prevent someone from fulfilling a contract). As COVID is no longer ‘unforeseen’ any contractor should ensure that COVID is covered in the contract and never rely on force majeure for allowing for further time to complete a contract because of it. Silver lining: Never be afraid to push back on contracts and question them, companies who do may well be thought of as more professional than those who don’t. Always allow enough time before work starts on site to make sure the contract is fit for the job. FIS will use its community influence to accelerate some of the work on JCT. Contract law expert, Dave Bebb of Fenwick Elliott AGM and conference www.thefis.org 19