Written evidence submitted by the Specialist Engineering Contractors’ Group [BSB 281]
1.1 The SEC Group represents the largest sector (by value) in UK construction. It works closely with the UK government on commercial matters related to the industry and is the first port of call for the devolved governments on construction issues. The overwhelming majority of firms in the sector are SMEs providing design services and construction/ installation, and maintaining built assets over their life. Almost 80% of the value of built assets over their lifetime is provided by the sector. For the most part firms in the sector act as subcontractors in construction supply chains.
1.2 The SEC Group is an umbrella representative body comprising the construction industry’s premier trade associations: British Constructional Steelwork Association, Building Engineering Services Association, ECA - Electrotechnical and engineering services trade body, Lift and Escalator Industry Association, SELECT (Electrical Contractors Association of Scotland), SNIPEF (Scottish and Northern Ireland Plumbing Employers’ Federation) and Scaffolding Association.
1.3 Our response is complementary to responses received by any of our individual members. We particularly agree with the evidence response provided by ECA – the Electrotechnical and engineering services trade body – which highlight many issues around industry professionalism and competence.
2.1 The contribution made by the specialist engineering sector to the built environment – from structural steelwork and lift installation to electrical systems and installations of heating, ventilation and plumbing systems (including systems operation and maintenance) – directly impacts on building safety.
2.2 Over many years SEC Group has campaigned for radical changes in construction procurement which, if they had been implemented, would have contributed towards improving building safety. Traditional construction procurement /delivery is characterised by endless rounds of outsourcing of work to myriad parties in ever-lengthening and fragmented supply chains. This is driven by an overriding desire to off-load risk (including those relating to safety) and perpetuate successive reductions in price (acknowledged by Dame Judith Hackitt in her Independent Review of Building Regulations and Fire Safety). This is, of course, fertile ground for compromising building safety.
2.3 To overcome this deeply-embedded problem we have sought to persuade governments over the years to adopt insurance-backed alliancing (IBA). In 2011 the Cabinet Office adopted it as a procurement model to be tested but government departments/agencies have done little to trial it. IBA requires that all key project participants are engaged at the outset to work with the client organisation to devise best for project solutions – the Alliance. There, then, follows a robust technical and financial assessment of the proposed solutions including those relating to safety in design and construction: if the risk assessments are satisfactory the project cost is insured against overruns; the Insurance.
2.4 Furthermore the insurance policy guarantees that any quality issues – including those that may impact on safety – will be addressed over a 12 year period. The first pilot project was an extension to Dudley College of Technology (visited by the Prime Minister on 30 June 2020) completed in 2017. Two years later this project has zero defects and no operational/performance problems. Two other pilot projects are in progress. IBA (comprising the robust technical assurance process) will provide the means to assess whether safety considerations have been fully addressed. A Building Safety Regulator will only need evidence that the policy of insurance has been incepted to be satisfied that the facility has been built to the required safety standards.
2.5 SEC Group has also campaigned for firms in construction to be licensed based upon their demonstration of competence/capability. This is best achieved by providing evidence of accreditation by reputable accreditation bodies. SEC Group’s trade associations require their members to be accredited by arms-length means. Examples include the electrotechnical certification scheme and the competence assessment scheme for the heating and ventilating sector. You can find more about the issues with standards and competence in relation to the draft Bill in the response to this inquiry from one of our members ECA – we advise the Committee to take into the consideration the evidence provided by ECA. In Scotland building warrants (showing compliance with building regulations) are issued by plumbing and electrical firms accredited under schemes operated by their trade bodies. The emphasis on attaining lowest price tends to favour those businesses which have done little to invest in improving their competence and capabilities. Re-focussing on competence may also help to address the massive hikes in professional indemnity insurance which have affected construction businesses since the Grenfell tragedy.
2.6 SEC Group is represented on the Procurement Advisory Group which has been put in place by the Ministry of Housing, Communities & Local Government. This group is drafting guidance on procurement for the Regulator.
Our evidence relates to the functions of the Regulator as set out in Part 2. We suggest certain amendments to the clauses and advise on other matters that should be within the Regulator’s remit.
3.1 Clause 3: The Regulator’s “building functions” should include the following:
A Building Safety Risk Register
the Regulator must have the power to insist that all procurements have a building safety risk register signed off by all key project participants (including subcontractors) prior to commencement of construction and the register must identify each risk, the ownership of the risk and how it is intended that the risk is to be managed;
following on from the above the Regulator must have the power to inspect risk registers and monitor the extent to which the risks have, in fact, been managed (for this purpose a template risk register could be developed by the Regulator).
Ability to respond to whistleblowing
the Regulator should have the power to encourage whistleblowing where there are safety concerns and respond by carrying out any necessary investigation;
in this context the Regulator should have power to question any party, demand evidence and report on the outcome of any investigation.
where guidance has been produced to support the Regulator in its building functions (as well as to support those parties affected by this legislation), the Regulator should have power to challenge non-compliance with the guidance;
in the absence of any reasonable excuse for the non-compliance the Regulator should have power to insist on adherence to the guidance.
In her report on building safety Dame Judith Hackitt said:
“Payment terms within contracts (for example, retentions) can drive poor behaviours by putting financial strain into the supply chain. For example, non-payment of invoices and consequent cashflow issues can cause subcontractors to substitute materials purely on price rather than value for money or suitability for purpose.” (para. 9.11)
Dame Judith highlighted the strong connection between poor payment practices – endemic in construction – and building safety. In this respect we believe that the Regulator should have an interventionist role. Therefore, the Regulator should be given the power to monitor projects for the purpose of detecting payment abuse either on its own initiative or in response to a whistleblower. If the scale of the problem justifies such intervention the Regulator should have the power to request the appointment of an independent party to investigate and report on the matter with recommendations to resolve outstanding issues. Alternatively (and more simply) the Bill could include a separate provision which requires client organisations to make direct payments to subcontractors and sub-subcontractors where due payments have not been discharged. Such regime has been in place in France since 1975 (Law no. 75-1334, 31 December 1975).
Collaboration between all project participants is essential if we are to improve building safety. We suggest that the Regulator be given express power to promote collaborative delivery processes that focus on best for project solutions as far as safety is concerned.
3.2 Clause 8: This clause would have rather more impact if the system to be established by the Regulator was also for the purpose of providing any information which the Regulator should be able to demand. The extent to which the Regulator can insist on certain information being provided is not entirely clear. Such a vital issue should be addressed in primary legislation.
3.3 Clause 10(2): An additional function is suggested: “making available to the Registrar established industry schemes which accredit firms for their competence”. The Registrar should have the power to challenge procurements where there is/has been a failure to use firms accredited by established and reputable accreditation schemes.
3.4 Clause 13(5): We question the need for consent to be obtained from the Secretary of State where the Regulator proposes to issue a direction. The Regulator should be seen as independent of political control. Its directions can, of course be challenged by local authorities/fire and rescue authorities where they are ultra vires its statutory powers.
3.5 Clause 16: Although the meaning of “building safety risk” can be extended by regulation the references to “fire” and “structural failure” are too narrow. Electrical and gas installation gives rise to significant safety risks as do, for example, ventilation systems and lift installation/repair.
3.6 Clause 17(2): The definition of “major incident” as an incident resulting in a “significant number of deaths” or “serious injury to a significant number of people” sets too high a threshold. The potential for a death or serious injury to a person is more appropriate. This also applies to clause 21(6) and 73(7).