Construction Brief: market insights and latest decisions November 2023

This article was co-authored by Imogen Severs and Tessa Bremner, trainee solicitors, London.

This update takes a look at some of the interesting and important developments that are currently impacting the industry. We also provide a case summary of Sudlows Limited v Global Switch Estates 1 Limited [12.07.23] regarding serial adjudications.

Carbon Emissions (Buildings) Bill

The UK remains a high performer when it comes to addressing climate change according to the Climate Change Performance Index. However, one concern has been the lack of reporting when it comes to building and construction which account for around a quarter (25%) of the UK’s carbon emissions – more than aviation and shipping combined.

The Carbon Emissions (Buildings) Bill, which was brought back to life (after it was originally abandoned) in February 2022 would require the reporting of whole-life carbon emissions of buildings and aims to set limits on embodied carbon emissions produced from the construction industries and other related activities.

‘Embodied carbon’ is the carbon footprint emitted during the entire construction process, from the extraction of raw materials to their manufacturing, transportation, installation, and disposal. This type of monitoring would enable construction firms to evaluate how specific areas of the construction life cycle are contributing to carbon emissions and identify areas which require change.

The Bill was intended to be brought into effect by ‘Part Z’, a set of industry-proposed amendments to the UK Building Regulations. The proposals included:

Whole Life Carbon (WLC) emissions would be required to be reported for all projects over 1,000m², or that create more than 10 dwellings. The Bill anticipated that emissions calculations and reporting would begin on 1 January 2025 and the imposition of upfront emissions requirements for construction works would start from 1 January 2027.
Before works start, the person carrying the works would be required to undertake a preliminary WLC assessment. A reference to the database where the emissions have been reported along with a list of material quantities would then be supplied to the Building Control Body (BCB).
When the works are complete the person carrying the works would be required to update the final assessment and quantities. The final WLC assessment would be reported via the UK Government portal.
Where a building required WLC reporting, the work could not exceed the target upfront carbon emission requirements. The WLC assessment would be used to demonstrate that the building will not exceed these requirements.

In November 2022, the Bill had its second reading and was scheduled to be debated again on 24 February 2023. This however has been delayed.

Nevertheless, there remains a call from the industry for embodied carbon regulation, and the Environmental Audit Select Committee noted in its report in May 2022 that such a policy was the “single most significant” action that the UK Government could take in the built environment to reduce emissions.

If these proposals are agreed, the industry will be faced with the task of carefully considering that the contractual regime between involved parties ensures compliance and it is also inevitable that there will be disputes arising from faults in WLC assessments and failure to meet “upfront carbon emissions requirements” as well as challenges in identifying accountability along the construction life cycle.

However, with these challenges comes scope for innovation and opportunity to bring growth to areas of UK industry that are innovating in pursuit of low-carbon construction products, from steel and concrete to timber and biomaterials.

Contacts: Imogen Severs and Louis Foscolo

CMA investigation

On 17 October 2023 the Competition and Markets Authority (CMA) opened an investigation into suspected anti-competitive conduct on the supply of chemical admixtures and additives used in the construction industry.

The investigation was launched following suspected infringement or infringements of Chapter I of the Competition Act 1998 (CA98) by a number of suppliers of chemicals and some industry bodies.

The CMA has stated it has reason to suspect anti-competitive activity involving the supply of chemicals used for concrete, cement, mortars, and other related construction products which are essential to the construction industry. It is also working alongside the European Commission’s investigation, and is in communication with other authorities including the United States Department of Justice, Antitrust Division.

An investigation period involving data collection, analysis and review will continue until July 2024. Following this, a ‘Statement of Objections’ will be issued if the CMA considers competition laws have been broken. The statement will set out the case against the parties and will provide them with the opportunity to reply before the CMA takes any action. However, not all cases will proceed to this stage, and no assumptions should be made in the meantime.

Contacts: Imogen Severs and Louis Foscolo

3D printing

3D printing is expected to reach a compound annual growth rate of 101.9% from 2023 to 2030.

3D-printed construction projects involve the automated layering of building materials via robotic arms or gantry systems. The design, shape, composition, and thickness of materials is pre-programmed using computer-aided design (CAD) programs or building information modelling (BIM). Whilst this technology is not new, it is continually evolving and increasingly utilised to build anything from construction parts and components to full scale buildings and infrastructure.

Accelerating rates of investment means the title for the world’s largest 3D printed building is quickly changing hands. A 10,105 SF horse barn in Florida overtook the previous title held in Oman by almost 50%. China is developing the largest 3D project yet, a 590-foot-tall dam to facilitate the Yangqu hydropower plant.

3D printing provides a time-efficient, cost efficient and sustainable construction practice. The onsite nature of 3D printing reduces transportation costs and emissions, highlighting an advantage over prefabricated and modular construction methods. By only utilising the specific amount of material required for the project, the cost and waste of construction materials is also reduced.

The market of 3D printing provides the opportunity to construct low-cost and eco-friendly developments. Building for Humanity has partnered with the 3D printer supplier Harcourt Technologies to develop an affordable housing development in Lancashire. The net-zero carbon site will consist of 46 dwellings and a community centre.

A lack of standardised construction regulation specific to the 3D construction industry is acting as a hinderance to its widespread adoption. In Ireland and the UK, Harcourt Technologies Ltd and Cundall Ireland are currently working on a project to bridge this gap. The project aims to produce a comprehensive set of standard 3D construction guidelines to ensure full compliance with all the relevant building codes and standards.

Contacts: Imogen Severs and Louis Foscolo

Court of Appeal sets clear guidance on serial adjudications

Sudlows Limited v Global Switch Estates 1 Limited [12.07.23]

The case involves two separate adjudication decisions, Adjudication 5 and 6, arising from a JCT Design and Build Contract entered into between the parties.

In Adjudication 5, Mr Curtis (the Adjudicator) granted Sudlows an extension of time for delays caused by Global’s cabling and ductwork issues. In Adjudication 6, Mr Molloy (the Adjudicator) concluded that he was bound by Mr Curtis’ earlier decision and awarded Sudlows a further extension of time for delays arising from the same issues. Mr Molloy stated that, if he was not so bound, he would not have granted the extension.

Proceedings were commenced in the Technology and Construction Court (TCC) where it was held that Mr Molloy was not bound by the previous adjudication decision and his decision was therefore unenforceable.

The Court of Appeal revoked the decision of the TCC.

In his judgment, Lord Justice Coulson reaffirmed the legal position that a second adjudicator cannot decide a dispute which is:

The same or substantially the same as a dispute that has already been decided in an earlier adjudication.

Coulson LJ then set out four key principles to be considered where there are overlapping disputes in serial adjudications:

The need for speed and temporary finality mean that the adjudicator (or an enforcing court) should be encouraged to give a common sense answer to the issue of overlapping disputes.
The need to access the decision of the first adjudicator to see if the second adjudicator has compromised the earlier decision.
The need for flexibility to prevent a party from re-adjudicating a claim that has already been decided but also to ensure that a new claim is not shut out.
The Courts should be slow to interfere with adjudication decisions unless they are clearly wrong.

Applying the legal test and principles above, Coulson LJ found:

The issue decided in Adjudication 5, being that Global were contractually responsible for the cabling and ductwork issues, was the same issue referred to in Adjudication 6.
It was irrelevant that the extensions of time related to two different time periods.
New evidence presented by Global in Adjudication 6 was irrelevant as it did not present any new issue.

The decision reinforces the ‘binding nature’ of adjudication decisions and provides some much needed clarity for contracting parties and adjudicators on how to approach re-adjudication. Where a party is dissatisfied with an adjudication decision, it should be challenged in arbitration or the courts, not by way of another adjudication.

Contacts: Tessa Bremner, Amrinder Aulakh and Louis Foscolo

Read others items in Construction Brief - November 2023