Building a Safer Future: How Project Managers Must Lead in this New Era

The Building Safety Act has ushered in a new era for the UK construction industry, yet many stakeholders appear to be unaware of this legislative sea-change. It is clear to most observers that the intent of the regulation is to make developers and building owners more accountable and to make the consequences of non-compliance much more onerous.

This regulatory overhaul coincides with a multitude of challenges facing our industry, including a climate crisis, a skills crisis, a housing crisis, and challenging financial markets. We are required to build more housing than we have ever done, to a higher standard, using fewer skilled trades, and with tighter financial models compared to when interest rates were more favourable.

Project managers, in particular, find their roles under increased scrutiny. However, many project managers may not realise the increased liability that they are now shouldering as key advisors to developers on capital projects. As the saying goes, “History may not repeat itself, but it does rhyme”. If this is true, then one thing is certain, project managers cannot simply “act as a post-box” and are duty-bound to compel clients to take a rigorous approach.

This article explores this topic and looks to the recent past for insights into what may lie ahead.

The client’s duty of care and the ‘Golden Thread’

The Act underscores the client’s “duty of care” for ensuring building safety, which extends beyond the mere appointment of competent professionals. Following the amendments from the Building Safety Act 2022, clients are now named dutyholders under Part 2a of the Building Regulations. The Building Regulations specify duties that the Client must undertake on any building work project (except domestic clients).

Clients of Higher Risk Buildings (as defined in section 120D of the Building Act 1984, as amended) must now actively engage in the design and construction process; it is the client (or a client representative) who must submit the gateway applications and also the client who must provide an electronic facility to house the golden thread of information during the project.

This necessitates a robust monitoring system that meticulously tracks decisions, rationale, and changes throughout the project to demonstrate that the building has been designed and constructed in line with Building Regulations and is safe to occupy.

Some clients may choose to underinvest in technical oversight, relying largely (or solely) on the design-and-build team to assure compliance. This attitude does not work under the new regulations.

The Client cannot simply outsource their duty of care. Although they can nominate others to undertake the work on their behalf, the responsibility still lies with the client under the Regulations. Clients who do not consider the need to appoint an adequately resourced Client Monitoring Team (CMT) may be putting their project and the many relevant stakeholders at risk. The days of “arms-length” due diligence are behind us as an industry, or at least they should be.

Even clients who have invested in rigorous review processes will discover that their need to demonstrate due diligence has changed. It is one thing to conduct due diligence; it is another thing entirely to demonstrate the same digitally in a manner which will satisfy regulators, investors, insurers and other key stakeholders. And yet, this is what is required. We have moved from the stage where these stakeholders have seen too many failures at too great a cost. Today, the message is quite clear,“don’t tell me… show me!”.

The Digital Golden Thread referenced by Dame Judith Hackett is a crucial component of this new regime, and Project Managers must work with clients to ensure that this is at the centre of every project.

The project manager’s role

The CIOB Code of Practice for Project Management emphasises the project manager’s responsibility to advise clients on all aspects of the project, including legal and regulatory compliance.

Furthermore, the recently published APM Competence Standard for Project Managers includes the following as one of the responsibilities of the project manager:

‘Understanding the requirements of building regulations and other relevant legislation to plan and manage the construction project, including relevant duty holder roles and also ensures the client knows, understands and accepts their responsibilities.’

In the Building Safety Act context, this translates to guiding clients in developing and implementing effective monitoring systems. Project managers can provide invaluable expertise in:

• Picking the right team: Ensuring that the Client Monitoring Team (CMT) is competent, adequately resourced, and fit for purpose.
• Developing a monitoring framework: This includes identifying key areas for monitoring, establishing clear protocols for data collection and analysis, and ensuring the accessibility of information to relevant stakeholders.
• Facilitating open communication: Regular communication between the client, design team, and contractor is a duty under The Building Regulations etc. (Amendment) (England) Regulations 2023 and crucial for maintaining transparency and ensuring everyone is aware of potential risks.
• Providing training and support: Equipping the client team with the necessary knowledge and skills to effectively monitor the project and understand their legal obligations under the Act.

Project managers must also learn from the past

In the Pozzolanic Lytag Limited v Bryan Hobson Associates case it was determined that Project Managers held a somewhat surprising level of responsibility for advising their clients on matters which may not have been considered to be within their remit. This case involved the construction of a concrete dome which subsequently collapsed. The main contractor was primarily liable under the Design and Build contract but did not hold appropriate professional indemnity insurance.

Pozzolanic Lytag Limited (‘PLL’) commenced proceedings against the project manager, Bryan Hobson Associates (‘BHA’), for failing to ensure the contractor had proper insurance cover. It was held that under their duty of care, BHA should have ensured that the contractor held adequate insurance. The Judge held that the fact that BHA lacked the expertise to assess the adequacy of the insurance held by the contractor did not relieve them of their responsibility. BHA could have obtained expert advice from an insurance broker. Alternatively, PLL could have informed BHA that expert advice is required and advised BHA to seek it.

In this case, the Judge held that project managers were to act proactively regarding insurance. They are to inform the client and “seek to persuade the client to obtain” expert advice on the appropriate insurance. The Judge stated, “What he (the Project Manager) cannot do is simply act as a ‘post-box’ and send the evidence of the proposed arrangements to the client without comment”. One might apply the same thinking to the systems, frameworks and monitoring necessary to ensure compliance with the Building Safety Act.

Law firm, Fenwick Elliott noted in their assessment of this case that “The use of the word “persuade” suggests that a project manager should do more than just advise but should make very clear to the client the importance of dealing properly with insurance. Also, he is suggesting that even where the contractor is to take out the insurance, the client, meaning the employer, could be advised by the project manager to take out the insurance.” This is notable in the context of the Building Safety Act and client’s approach to monitoring. Project Managers must document any concerns surrounding inadequate resourcing of this crucial function and “seek to persuade” clients, in writing, that they need to employ appropriate resources. Failure to do so may have ramifications in the future for all parties.

There are several other examples in case law where the project manager has needed to show that they have advised and even compelled their clients to take a more rigorous approach to risk management. The expectation that Project Managers must inform the client where expert advice is needed is a crucial point.

Impact on the real estate market

The increased emphasis on due diligence and the Golden Thread is undoubtedly impacting the real estate market. Today’s investor is tomorrow’s Accountable Person under the Building Safety Act; therefore, funders and investors are increasingly looking for projects and assets with demonstrably robust monitoring systems and clear accountability for building safety. This creates a more sophisticated demand for real estate. Developers who seek to protect their returns will select project managers who possess a strong understanding of the Building Safety Act and can guide clients in meeting the requirements of potential investors.

Developers who fail to see the importance of technical due diligence will fall foul of this demand over the coming months and years. Those who cannot adapt, will be negatively screened by investment committees in the very near future.

Conclusion:

The Building Safety Act presents both challenges and opportunities for the construction industry. Project managers, with their unique skill set and understanding of both the technical and regulatory aspects of construction, are well-placed to guide clients in navigating this new era.

Project managers can play a pivotal role in building a safer future for residents and stakeholders by promoting a culture of proactive monitoring, clear communication, and robust information management.

The CMT plays a crucial role in the successful delivery of any project, including those that will be delivered through the Building Safety Act. Catalyst’s CMT offering provides project managers with a single company solution, led by experts, and enabled by our custom-built Obi software platform. The world we operate in is changing and make no mistake; those who fail to adapt will be left behind.