Tue 27 Feb 2018

Constructing the Team - 20 years of the Construction Act

It's hard to believe that 24 years have passed since Sir Michael Latham's review of constructing excellence, "Constructing the Team."  Following on from that review of construction practices a breakthrough piece of legislation known as the Housing Grants Construction & Regeneration Act, or more commonly the Construction Act, was born.  Although the Act itself is dated 1996 it came into force on 1 May 1998.  This year will be its twentieth anniversary.

Constructing the Team made quite damning observations on the construction industry and in particular the problems associated with cash flow.  It made, some said, radical recommendations to try to ease the pressure.  Interestingly the analysis of the state of the industry was undertaken not in isolation but with the contribution of  all the constituent parts of the industry, including contractors and clients.

Recommendations included substantial changes to JCT structures and the phasing out of bespoke contracts in favour of NEC.  A clearer definition of the role of a project manager was considered necessary.  Quality as well as price were recommended as relevant considerations for the purposes of tender analysis.  Allocation of design responsibilities and sharing of risk was discussed.  Fair treatment in an atmosphere of mutual co-operation gave rise to what we refer to now as "partnering." It was considered that retention ought to be held in separate trust accounts to protect from insolvency.  Some of these recommendations were embraced with more fervour than others. 

Importantly a Construction Contracts Bill was recommended, with adjudication to be the normal method of dispute resolution.  This led to what we now know as HGCRA 1996.  Some of what Latham recommended was included within the legislation did not make the final cut, such as a statutory obligation to maintain compulsory latent defects insurance.  However the abolition of pay when paid, and the statutory right to adjudicate did mark quite a departure from the construction industry of old. 

It's been a while I'm sure since any of us have dusted off our copy of the report but the sentiment of the issues with the industry, and the requirements of both clients and contractors remain as pertinent as ever.

"it is not easy to create teamwork in construction when everyone is struggling to avoid losses.  If the economy is going wrong, little will go right in the construction industry." 

"Clients will commission projects which contribute to their wider objectives.  Their wishes will also normally include the following-

Value for money; Pleasing to look at; Free from defects on completion; Delivered on time;  Fit for the purpose;  Supported by worthwhile guarantees;  Reasonable running costs;  Satisfactory durability.

Clients do not always get what they asked for.

Clients should get what they ask for.  Contractors should be paid a reasonable remuneration for providing it.  It was this that was at the core of the report, and the legislation which followed.   As with all good things, the aim is not always reflected in the execution, and twenty years on further changes are afoot.  

Meantime, from a cursory Google search a twentieth anniversary equates to a gift of china.  With china comes tea, and with tea comes cake.   In the coming weeks we will be highlighting significant changes within the construction industry, and particularly to the Construction Act, in the past twenty years.  Birthday cake for the team we constructed is more than justified.

Make an Enquiry

From our offices we serve the whole of Scotland, as well as clients around the world with interests in Scotland. Please complete the form below, and a member of our team will be in touch shortly.

Morton Fraser MacRoberts LLP will use the information you provide to contact you about your inquiry. The information is confidential. For more information on our privacy practices please see our Privacy Notice