Impact of the Building Safety Act on project procurement

While there has been much speculation about what the Building Safety Act will mean for existing procurement practices, what is certain is that current process will need to change to reflect the new requirements, particularly on Higher Risk Buildings (HRBs). 

The one thing the Building Safety Regulator (BSR) has been clear on is that the current practice of starting works on site whilst other key elements of the design are progressed will not be acceptable.

The BSR has said it cannot see the current process working  in the new regime because design occurring at the same time as construction will not be viable. Design and build will have to change.

Single stage design and build 

 It raises the key question that if design needs to be progressed to satisfy Building Control before works start on site, does that mean the end of single stage D&B?

The principles of projects are essentially unchanged in that a design needs to be progressed and built that meets Building Regulations at completion. The main changes in risk profile are the point at which certainty around compliance with building regulations is achieved, the bodies capable of providing that approval, and who takes the contractual risk of delays in approval from the BSR. The main issue is that historically this process typically happened concurrently with construction, and the risk of achieving building regulations approval was well understood, to the extent that the risks were able to be controlled and priced.

The newer regime will mean this moves to a position that could delay start of physical works on site. The counter to this is that works should progress much more smoothly once started as delays awaiting design information or sign off should not occur so readily. The main concern at present raised by contractors under a design and build contract is how the risk of delays from the statutory gateway approval process will be handled contractually.

Until more schemes have gone through the gateway process, providing clarity on what will and, more importantly, will not be acceptable to the BSR, and the time it is likely to take to gain gateway 2 approval, the likelihood of contractors willing to accept this risk will be very low. It is far more likely that contractors will seek to be engaged under a PCSA to gain Gateway 2 approval, before committing to a contract sum to deliver the build, leading to a natural move to two stage tendering.

The main concern here from clients is that this means they would be heavily invested in one contractor and could face inflated build costs at the final offer stage with the contractor knowing that restarting the process with another party would cost considerable time and money. Relationships and trust will be more critical than ever here and more collaborative working certainly looks to be the most viable way forwards.

Product availability 

One scenario which has been raised by contractors as a key risk, is what happens if a specified product, or system designed and approved under gateway 2, is no longer available? If for example a supplier withdraws the product from the market, material availability means it cannot be procured in time, or the supplier ceases to trade. The most significant impact here is if these products were part of the external wall build up.

In these circumstances the contractor would be forced down the six week significant change route, and they are likely to want to see that risk covered off in contract terms.

Project handover and gateway 3

For HRBs at completion the project needs to go through the formal gateway 3 process before occupation. This is another key point as this is the time when clients are exposed to the maximum financing costs, before revenue starts to flow in to pay back loans. The statutory period here is eight weeks.

Little has been made of this to date as this is not the immediate focus for many trying to get their projects through gateway 2 and onto site, but we are already seeing clients trying to get this transferred into building contracts with PC linked to the completion certificate under the BSA.

Contractors are likely to push back on the statutory eight week determination period to avoid damages being linked to something that is outside of their ultimate control. So a balance is likely to be agreed on contracts to ensure contractors are not penalised for the failings of the BSR to meet the statutory period, but equally they are held accountable if they cause those delays due to poor information issued.

It is clear there are quite a few changes for the industry to grapple with, some of them may seem challenging to begin with, but that is why seeking expert advice and working collaboratively across the industry, will ensure a smoother transition to the working practices outlined in the act. 

This article was first published by Building Magazine in January 2025