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PI insurance premiums ‘reflect lack of change in construction’

 

A fire expert has warned the lack of change in the construction industry in the wake of the Grenfell Tower fire has kept professional indemnity (PI) insurance premiums high.

In a report last week, the Civil Engineering Contractors Association (CECA) revealed that, of its members who responded to a poll on the topic, 92 per cent have experienced substantially increased premiums for the insurance, which covers compensation claims if a business is sued by a client for a mistake.

CECA chief executive Alasdair Reisner said: “There has been a substantial hardening of the insurance market accessible to contractors, which has meant there are fewer insurance providers, narrower cover, increasing premiums and higher policy excesses.”

A Construction News investigation previously found that, post-Grenfell, PI insurance premiums for some envelope specialists had rocketed by up to 900 per cent.

When asked by CN about the issue in general, Jonathan O'Neill, managing director of the Fire Protection Association, the safety body whose main role includes encouraging insurers to work with the government on fire protection, said the construction industry had to show it had changed post Grenfell.

“If the insurance market can see a return on PI insurance, they will provide capacity," he said. "The difficulty we have is competence within the [construction] industry. We’re two-and-a-half years on from Grenfell, and I’m not sure the construction industry has moved as quickly as we would have expected it to in this regard." He noted a competency framework had been agreed by the Construction Industry Council but added: "We’re not seeing more competent people."

“The other issue is [contractors] don’t actually know the size of their liability. That’s the problem with the insurance industry at the moment. Until we’ve actually got a grip of what’s out there, [insurers] will struggle to provide capacity.”

O’Neill has previously called for measures including mandatory third-party specification, sprinklers on buildings of all heights, and a ban on single-staircase evacuation in order to ensure buildings are constructed to decent fire safety standards.

He added: "I think third-party certification would assist [premium costs], but again the construction industry has got to wholeheartedly embrace it."

Douglas Barnett, a director of insurance company Axa and chairman of the British Approvals for Fire Equipment, a body which offers third-party fire protection certification, told CN: “The price of insurance is driven by quality and driven by loss experience. Better claims and better risk management will drive more insurers wanting to quote. If more insurers wanted to quote, you'll get a better price – the market defines that with competition.”

Barnett, who had been speaking at a Fire Protection Association event on the Grenfell Inquiry, said that contractors should always use an insurance broker, whose job it is to guide them towards the most appropriate insurance provider.


By Miles Rowland

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Winners announced on £500m professional services framework

Aecom, Atkins and Mace are among firms appointed to procurement specialist Pagabo’s £500m Professional Services Framework for public sector organisations.

The framework will run for four years from April 2020 and has been split into 19 lots. These include heritage, town and master planning, and fire engineering. WSP has been awarded the most places, securing a total of 14 lots across all seven geographical regions. Pick Everard, WSP, Mott Macdonald and Turner & Townsend were among the other consultants to land slots.

A total of 38 SMEs have also secured places.

Pagabo chief executive Simon Toplass said: “We are already working closely with the providers appointed to both this Professional Services Framework and our recently announced Major Works Framework contractors at our mobilisation sessions throughout the country. The demand for both frameworks from SMEs to large, nationwide companies, has been down to our continued mission to simplify the procurement process through the use of technology and innovation.”

Last month, Pagabo announced the winners of its £10bn Major Projects Framework, which saw ISG, Morgan Sindall and Sir Robert McAlpine among the suppliers appointed.

The Professional Services Framework is a renewal of Pagabo’s initial framework of the same name, which has been valued at £200m and delivered projects for Southampton City Council, Manchester City Council and Humber Foundation NHS Trust. A total of 700 projects have been supported by the framework.


By Caroline Wadham

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Grenfell Inquiry lawyer backs witnesses’ immunity from prosecution

The lawyer advising the Grenfell Inquiry has recommended the chair asks the Attorney General to give corporate witnesses protection from having their statements used against them in prosecution.

There was shock at the inquiry last week when an application was made by some of the corporate core participants to be granted the privilege not to self-incriminate when they give evidence. The undertaking would mean anything they say at the inquiry cannot be used against them in any potential prosecution. Counsel for the inquiry Richard Millett gave his recommendation to chair Sir Martin Moore-Bick this morning, and hearings have now been suspended until a decision is made.

Noting it was "with some regret, perhaps", the QC said he believed it is the best way to try and get the truth about how the refurbishment of the tower between 2014 and 2016 contributed to the catastrophic blaze that killed 72 people on 14 June 2017. He added that if the undertaking is granted by the Attorney General, the government's chief lawyer, it would give the chair the power to compel witnesses to answer all questions “under pain of punishment” if they refuse.

Millett’s recommendation came after the inquiry heard from legal representatives for the bereaved and survivors as well as other core participants.

Speaking for two of the four survivor groups, QC Michael Mansfield strongly condemned the nature of the application. He said: “It’s barely a week ago that the representatives of the witness we understand is requesting the undertaking […] that they were standing here commiserating with the families one after another, saying how they sympathise with the agony and the tragedy and the sorrow and at the same time saying they [the families] are entitled to answers to the questions and the truth.

“What we did not know at that stage was underneath all of this was an intention to tell the truth on their terms.”

Mansfield went on to urge the chair not to put the question to the Attorney General. He suggested pushing the burden of whether to answer or not back on the witnesses to decide for themselves. He said: “If they decide the honourable things to do is to not answer questions, at that point they would have to justify to you and provide reasonable grounds – not all the detail – about what they are worried about. In other words, what’s the area in which they might have material that might incriminate them.” He added: “They must come here and justify in front of you, in front of the families, in front of the public.”

Millett responded to this suggestion later on: “It is too much of a gamble to wait and see what happens,” he said. “The conduct in the way in which the application was made does not prompt any degree of confidence that the conscience of these witnesses will triumph in the end.”

Sir Martin said the inquiry would consider its options and provide an update on the course of action as soon as possible. Witnesses who had been due to attend tomorrow have been stood down, he said, and no timeframe was given for when hearings might resume.


The inquiry continues.


By David Price

Contractor fined £450,000 over student flats fire-safety failings

The main contractor was among three firms ordered to pay fines totalling £670,000 after admitting fire safety failings at a building used for student accommodation in Leeds.

Judge Mairs at Leeds Crown Court heard how Trinity Halls on Woodhouse Street had only one available fire escape which was compromised due to combustible materials, putting at serious risk the 27 students who had moved in, in September 2016.

The court heard the students had moved into the building on the upper ground floor while other floors were still under construction.

There were a string of other failures which contributed to the significant risk including lack of appropriate fire alarms and detection, exposed timber framing, the storage of flammable items on stairwells and no markings indicating fire escape routes.

Judge Mairs described the situation as having the “potential for catastrophe.”

The failings came to light in September 2016 after a concerned father called West Yorkshire Fire and Rescue Service (WYFRS) to report the building.

He had been dropping his daughter off to live there, but became concerned by the state of the premises and would not let his daughter stay.

Trinity Developments Ltd, the owners of the building, admitted four safety breaches. Niche Homes Ltd, contracted to manage and let the property, also admitted the same four breaches.

These are:

  • Failing to make a suitable and sufficient fire risk assessment.
  • Failing to take precautions to make sure the premises were safe from risk of fire.
  • Failing to provide appropriate fire detection and alarm system.
  • Failing to provide an adequate number of fire escape routes and exits.

In addition to this APP Construction Ltd, who were contracted to design and build the property, admitted one charge of:

  • Failing to provide an adequate number of fire escape routes and exits.

At previous hearings guilty pleas were entered to the charges, all relating to the period September 24th 2016 to September 27th 2016.

The companies were all offered credit in court for their early guilty pleas. Acceptable safety measures are now in place at the building.

Judge Mairs said that all the companies had “high culpability” and that “the risks were so obvious that a member of the public spotted them – so they should have been obvious to the companies involved.”

In sentencing, he fined APP Construction Ltd £450,000, Trinity Developments Ltd £160,000 and Niche Homes Ltd £60,000.

The three companies also agreed to pay costs. APP Construction Ltd will pay £9,000. Trinity Developments Ltd will pay £6,000 and Niche Homes Ltd will also pay £6,000.

Following the sentencing Chris Kemp, Senior Fire Protection Manager for West Yorkshire Fire and Rescue Service, said:

“This case demonstrates the importance those responsible for building construction, development and occupation have in understanding their duties and acting responsibly to take account of the safety of the people they are responsible for.

“As Judge Mairs highlighted, the dangers and risks found at Trinity Halls were so obvious anyone without a technical fire safety background could identify them.

“The conditions that were found on site were such that some of our senior officers have not seen such blatant disregard for the law and the safety of residents in 28 years.”


Br Grant Prior

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Crossrail hires ex-HS2 MD to lead final delivery

Crossrail has appointed former HS2 phase one managing director Jim Crawford as its new chief programme officer.

A spokesman for the London rail project said that Crawford will take on responsibility for "end-to-end delivery" of the new Elizabeth line in the newly created role. Intensive operational testing will begin in the autumn, with so-called trial running operations being launched to test how the service will work.

Crawford joined HS2 in May 2014, with his final role being to help the under-threat project work on its business case before departing in late 2019.

He had formerly worked for Railtrack and Network Rail.

Crossrail chief executive Mark Wild said: “The key focus for everyone on the Crossrail project is commencing intensive operational testing of the Elizabeth line as soon as we can in 2020 to enable passenger service as early as possible in 2021. Entering trial running requires the project to transition from construction into an operational railway, this is a complex change and we need to have the right leadership team for this critical final phase.”

Wild has also promoted programme controls director Mark Cooper to the newly created position of chief projects officer, where he will be in charge of overseeing completion of the remaining works and assurance of assets.

Crossrail was originally set to open in December 2018 and cost £15bn. Its latest estimate is for a summer 2021 opening, and an overall budget of more than £18bn.

An announcement of the government’s decision on whether HS2 will go ahead is likely to be made this week.


By Ian Weinfass

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McLaren revenue tops £650m but margins slip

McLaren’s revenue jumped above £650m in its last financial year as the company saw its margin slip.

Operating profit of £3.6m on turnover of £650.9m for the year ending 31 July 2019 left the company with an operating margin of 0.6 per cent. In its previous year turnover was significantly lower at £585.6m, but it reported around £1m more profit, giving it an operating margin of 0.8 per cent. The company has not published its full accounts for the year yet, but in a press release revealing its headline figures it claimed to have “strong” liquidity and no long-term debt. It also highlighted that its 2019 growth and profit had been achieved in a “highly competitive market”.

McLaren has traditionally focused on the private sector, but is targeting more public sector work. Chairman Kevin Taylor said: “Our investment in delivering projects to the public sector shows our commitment to diversifying and securing future contracts in challenging market conditions and bringing more much-needed homes to the UK.”

The contractor has focused on winning jobs through national and regional frameworks. In July last year the company secured a spot on £5bn London Construction Programme major-project framework. The same month saw the company poach Bouygues director Mike Naylor to take on a new public sector-focused role as director of developments and partnerships. The appointment came a couple of months after its previous public sector-focused director Keith Rayner left the company around a year after jumping ship from Bam Construct.

Most of McLaren’s headline jobs from 2019 have been in the office and retail markets, where demand has been subdued. Among the projects it highlighted from last year are Bracken House in the City of London, now home to the Financial Times, a 100,000 sq ft office in Farringdon that LinkedIn has taken as its headquarters and the extension of Lakeside Shopping Centre in Essex. Looking to the current year the company confirmed it is on course to deliver Leicester City FC’s new training complex in 2020.

Taylor emphasised that alongside diversifying the markets it operates in, McLaren is also investing in its digital capabilities to bolster the company. He said: “A defined digital strategy means we are bringing additional design efficiencies, data management and innovative project management processes to our business for the new decade.”

McLaren received BIM Level 2 accreditation in 2019. The company aims to give all projects a ‘Digital Delivery Plan’, which will see data on design, programme and procurement consolidated into one source.

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