Fire safety remedial work in England and Wales
December 13, 2024
Following the announcement of the Government’s new Remediation Acceleration Plan, we look at practical steps that owners of Higher-Risk Buildings can take to maximize the recovery of costs incurred when remedying fire safety defects.
Why should I read this?
We are at a critical juncture in fire safety legislation, particularly for Higher-Risk Buildings (HRBs). On 2 December 2024, the Ministry of Housing, Communities, and Local Government announced a new remediation plan which sets a deadline of the end of 2029 to both identify and address certain fire safety issues including remediating unsafe cladding in all HRBs. It also introduces tougher penalties for those who fail to act.
Owners who have a legal obligation to remedy fire safety defects in their at-risk building, will therefore have to act swiftly to ensure the necessary remedial works are carried out, with a view to recovering, where possible, the associated costs from those who were originally responsible for designing or carrying out the defective works.
The route to recover these costs, which could amount to tens of millions of pounds in respect of a building, is often not straightforward and is unlikely to be resolved prior to costs being incurred.
This article therefore aims to provide a practical guide on how best to maximize the recovery of remediation costs for those building owners who are procuring remedial fire safety works.
What should I do?
Generally:
- Maintain a contemporaneous audit trail of the procurement process, including decision-making processes, to demonstrate that actions taken were reasonable. This both assists in justifying the extent of costs incurred and evidencing mitigation.
- Procure works and services in a manner that allows costs to be particularized for specific defects or types of defects. This approach preserves the causative link between the breach and the resultant loss and enables cost separation if the opposing party is found partially liable.
For example:
- Specificity in Contract Prices: Contract prices should be highly specific, detailing particular defects and the itemised cost of rectifying them. This clarity helps align necessary works with fire safety standards and reduces the risk of reimbursement challenges.
- Composite Pricing and Categorisation: Prices can be agreed on a composite basis and categorised by defect. While this may complicate the payment process, it simplifies the itemisation and monitoring of remedial work costs, which is crucial for successful recovery claims.
- Budgeting for Incidental Work: Incidental work is inherent in large-scale construction projects. Unforeseen costs should be budgeted in advance, with a schedule of rates agreed upon beforehand. This approach ensures traceability and accountability for cost variations and avoids significant retrospective changes.
- Preliminaries Costs: Preliminaries costs will likely be priced separately from the quantified schedule of remedial works, as attributing specific preliminary costs to specific defects can be challenging. If other works are being carried out in tandem, efforts should be made to allocate preliminaries costs to those works to the extent they impact on the same.
- Professional Appointments: Professional appointments will likely include time-related services (e.g., project management) and task-related services (e.g., design). For task-related services charged on an hourly basis, consultants should ideally provide records of the services undertaken, referencing the specific defect or type of defect.
- Staff and Employee Costs: Time spent on ‘normal’ work activities is generally not recoverable. However, time diverted from normal activities, leading to additional expenditure, can be recoverable as damages (e.g., hiring additional staff to backfill roles or paying existing employees for extra hours). This similarly applies to in-house legal time which may also be recoverable as a litigation cost. All such time spent by employees/consultants should be recorded contemporaneously where possible.
By adhering to these practical guidelines, property owners can significantly improve their chances of recovering the costs of fire safety remedial works.
For more information on defects claims and cost recovery, please contact:
- Jessica Neuberger
- Hamza Sekkar
- Jennifer Fitzmaurice
Further reading on the Building Safety Act 2022, can be found on our website
Building Safety Act | Business Topics | Eversheds Sutherland