Spec Finish

www.thefis.org 5 Voice of the industry DESIGN LIABILITY SQUEEZE THE DAY T HE core principles of risk management are identification, analysis, quantification (likelihood and impact) and mitigation. When we get to mitigation in construction, frequently the default is to reach for the contract. Then, mitigation tends to be less about reducing the risk to the project and more about looking for ways to bury it in the contract, ensuring that someone else takes the hit if it goes wrong. Contractor’s Design Portion is a contractual tool that can open the door to risk avoidance. It starts at the top, the designer doesn’t have the time, information, knowledge or necessary insurance to decide on a critical detail. Rather than investing vital time and resource in working the problem through, liaising with the supply chain (which is unlikely to have been appointed anyway) and seeking expert guidance, the path of least resistance is ‘contractors choice’ and so the squeeze starts. The main contractor then has the choice to take this risk or walk away. Walking away fromwork is always a tough call, businesses are hungry, turnover is essential (profit too, but we can always squeeze the packages a bit and call in a few favours, can’t we?!) and “you have to take some risks – right?” So, the risk now sits with the main contractor. The kicker here is that the main contractor is highly unlikely to have the in-house knowledge or experience to fill in the blanks in the design, decide on the appropriate materials, products, interfaces and penetration details. So, inevitably, they dust off the Contractors Design Portion supplement JCT (or equivalent) and the risk now sits in the specialist sub-contract and the squeeze continues. Risk control procedures Whether to take this liability can be a life or death decision for the specialist in more ways than one. In the past, much of this was ‘managed’ by a phone call to the product manufacturer. A quick “do you think”… “should be alright” phone call and concerns were allayed. The Grenfell Inquiry has flagged up the dangers in this approach. The big question is whether “should be alright” was genuinely competent to make this call or whether they were more motivated to get the sale? Regardless of the final decision of the Inquiry, manufacturers’ risk control procedures have tightened. Unless the precise configuration within the design has been tested and there is clear scope or field of application covering the myriad of possible combinations of materials and products, it will not be signed off as ‘safe’. So, the specialist sub-contractor is now left with the decision to take the design liability or walk away. The better businesses will identify, analyse and qualify the risks. Somemay decide to walk away, others will be equipped andmay decide to accept this risk. Either decision, if based on information and analysis of the risk, should be respected. There are specialists who are willing to undertake tests to enable them to better interrogate and control the risks, but this costs money and careful attention needs to be paid to insurance, which seems to be an ever expanding cost for an ever shrinking cover! We must ensure that the time required to identify, analyse and quantify risk is not squeezed out. We must ensure that when the good walk away we question why and it is never the case that realistic pricing of risk is cast aside in favour of a ‘keener quote’, based not on considered risk management, but a “what’s the worst that can happen”, or “if it ever comes home to roost, we’d just bust the business” approach. Trust and transparency The Building Safety Bill (covered in more detail in this edition) is a key lever for change. Whilst I am uncomfortable about the impact of retrospective changes to the Defective Premises Act (that would leave specialists disproportionately exposed to legacy issues), the direction of travel should start to drive effective consideration of risk earlier in the process. Working out howwemanage design liability as a supply chain, is perhaps themost critical consideration in our transformation of construction. A key ingredient in this is time and commitment – we need tomove to earlier commitment built on trust and transparency, building relationships up and down the supply chain that support collaboration and respect for the businesses behind the quotes. Change is coming, but it will happen quicker if we really reconsider our approach. A simple place to start is with AdamSmith, the father of modern capitalism. Hemakes it clear that increased risk should go hand in hand with increased reward. When we are confronted with insurance selling less for more, is it right that contractors are being asked to domore for less? IAIN MCILWEE Chief executive Finishes and Interiors Sector