Cladding

What issues face the Building Safety Fund (BSF) and its recipients?

The Building Safety Fund is set up to support the replacement of unsafe cladding

The government has announced an additional £3.5 billion extension to its Building Safety Fund. This provides additional support to rectify cladding on at-risk buildings over 18m tall. Many have pointed out that a key issue with the fund is that it won’t address the full range of fire safety issues in buildings. But is the funding enough to address unsafe cladding?

Based on TFT’s ongoing work supporting applications for these funds for building owners and developers, market forces pose a risk to an overall programme of re-cladding. Achieving swift and effective improvements to at-risk buildings may require additional funding and extended deadlines.

The Building Safety Fund is set up to support the replacement of unsafe cladding

Read more

TFT’s project management specialists help mitigate our clients’ exposure to supply chain risks. However, fundamental supply issues will nonetheless lead to increased costs and timings for all involved with re-cladding buildings. In a worst case scenario this could lead some to compromise on the quality of the remedial work.

TFT currently provides project management and quantity surveying services covering 35 high rise buildings across the UK, supporting applications for the BSF grant fund. Our role is to manage a programme that fulfils the safety needs of each building, while also managing costs and timelines. The capital expenditure for TFT’s programme portfolio is over £100m.

Whilst the additional funding is welcome for the extensive scope of works required to make these buildings safe, the below issues give cause for concern:

Supply chain capacity: fire engineering services and cladding material

These works require specialist services, engineering advice and construction works. We have found increasing demand for key services over the last six months, including specialist fire engineering advice, façade engineering advice as well as construction services. This creates a bottle-neck in the market.

The result is that suppliers are challenged to deliver fully and to preferred deadlines. Pricing for these services is rising as one would expect in a market-place where demand outpaces supply, well beyond those which have been benchmarked over a year ago.

Material suppliers are also squeezed. There is limited stock of suitable insulation materials which have similar thermal properties, at the same physical thickness and which have a suitable fire rating. The limited availability of these materials is limited and there may be a lag while the market adjusts and increases the supply of these specialist materials. Otherwise, there are further issues around how buildings may be re-designed and detailed with thicker external walls.

The scale of the problem is becoming more fully understood as leaseholders and freeholders undertake investigations of their high risk buildings and understand the remediation solutions. There is a real risk of these costs spinning out of control and this additional funding again being insufficient.

How TFT manages demand

Our teams work together to manage market demand and avoid creating bottle-necks in resource or specialist service supply chains.

A collaborative online programme management approach allows us to share data between projects and balance the supply chain and demand, ensuring that no contractor or supplier is overburdened. We do this using online project management tools and data collection to ensure our analysis can be undertaken in real time and provide clients and the project teams access to all this information, as required.

While these measures help to manage TFT’s impact on suppliers, the wider market effects are still significant and will put pressure on all parties in the future.

Costs and priorities of fund allocation

As well as managing these escalating costs, building owners must be able to support a full and proper application for grant funding or risk rejection. Thousands of applications have already been turned down.

Whilst pre-tender support is available, there may be delays in commencing projects whilst this support is applied for and received. If building owners and leaseholders have forward funded these initial design and investigation costs, it’s not clear that they would get this money back in the event of a rejected application. There are significant costs just to gather the information to secure funding and meet the funding deadlines. This will challenge all but very large developers or funds to support the works.

In addition, it’s not clear how the fund prioritises funding and how the highest risk buildings are categorised. The current terms suggest a first-come-first-served system. More clarity on the priorities assigned to tall blocks, or those with limited fire protections, would be useful for applicants and for wider public information.

Using data and building records to avoid a repeat scenario

Once the funds are secured and supply chain issues navigated, the last thing building owners and residents will want is to repeat the process years down the line. Quality control on how the works will be monitored and certified as complete will be of the utmost importance.

In addition, we must ensure accurate record-keeping on the building and the works undertaken. This includes updating existing building operations and maintenance manuals. It may sound obvious, but in our investigations data on wall composition was inconsistent and leads to complications identifying risks and taking the right steps to fix these issues.

What should be done?

The process of removing and replacing cladding on at-risk buildings across the UK is a huge exercise for procurement and project management.

As project manager, TFT can mitigate clients’ exposure to market risks and the demands on specific supply chains. However, the government will need to consider additional costs and lengthened deadlines for all parties involved with re-cladding buildings, if there’s a risk that not doing so will lead to sub-standard work done this time, requiring additional improvements in the near future.

Fire safety update: Approved Document B 2019

An updated version of Approved Document B – the government’s guidance for how to meet the requirements of Building Regulations 2010 – has been published. It includes guidance for demonstrating that new buildings meet the required standards of fire / life safety.

New government guidance has implications for new building fire safety in England and Scotland.

From a cladding perspective, the headlines in England, as introduced under the November 2018 regulatory ban, are as follows:

  • Regulatory restrictions apply to the external walls of certain buildings with sleeping accommodation over 18m. The buildings within the scope of this restriction include: hospitals, dormitories, student accommodation, sheltered housing and apartment blocks.
  • All significant external wall materials on the building types listed above must essentially be non-combustible (i.e, European Class A2-s1, d0 or Class A1).
  • The restrictions do not apply to hostels, hotels, boarding houses, commercial buildings, or any buildings below 18m. However, the commercial and reputation implications of using combustible cladding materials need to be carefully considered.  

The situation in Scotland is more robust. A ban on combustible cladding materials will apply to buildings with a storey height above 11m, both to domestic and non-domestic properties and comes into force on 1 October 2019.

TFT has experience of navigating this evolving situation, including the coordination of cladding safety investigations and remedial works.

Please contact Simon Young for more details.

Manchester’s Beetham Tower in disrepair: Lessons from a “Draconian” remedy

Beetham Tower, Manchester. Source: Craig Sunter.

A new disrepair case has been reported, relating to Manchester’s tallest building: the iconic Beetham Tower in Manchester (you know it; that new glass one with the top half larger than the bottom half). Here we explore the ramifications and lessons to learn from an unusual case.

In Blue Manchester Limited v North West Ground Rents Ltd [2019] EWHC 142 (TCC), the judge heard about three issues including potential disrepair to the cladding.

The Landlord had obligations to the hotel-operator Tenant to keep the retained parts of the building (including the cladding) in repair.  Problems had been found with parts of the cladding installation and, prior to the hearing, a temporary solution had been implemented.  More particularly, the bond provided by the structural sealant of the insulated ‘shadow box units’ was failing in some cases.  The temporary remedy was to screw-stitch pressure plates to the frame profiles, to hold the panels securely in position.

The question for the judge to consider was whether, at the time of the hearing, the cladding was in disrepair.  He found that it was in disrepair.  In so doing, he relied to a very large extent on the 5-stage analysis of disrepair published within Dowding and Reynold’s dilapidations text book.  He also took the aesthetics of the building into account.

To the observer, informed only by the facts as reported in the judgement, it seems relatively clear-cut that the cladding would be found to be in disrepair.

For the defendant landlord though, this appears to have been a problematic case for three particular reasons:

  1. They are a ground rent company and may have had little expectation of having to get involved with works of this scale, the recovery of the cost of which might be restricted by the terms of leases with the various tenants.
  2. Matters were also complicated somewhat by the demise of Carillion and by both parties holding warranties against the cladding sub-contractor.
  3. The claimant tenant was (unusually) asking the judge to award the remedy of ‘specific performance’ as well as damages.

It is the granting of an order for specific performance which perhaps elevates this case to the unusual.

That remedy was awarded despite the judge describing it as ‘draconian’ and also despite the tenant having an alternative contractual remedy akin to a Jervis v Harris process.

It is more normal for specific performance not to be granted in England and Wales, because the terms of any order can be difficult to draft, such that it would be difficult for the party obliged to comply with the order to know whether it was doing so in an appropriate manner.  In this case the judge allowed what he considered to be a reasonably generous time frame (of 18 months) for the landlord to comply, and also allowed the landlord to apply to the court for further guidance under certain circumstances.

The Tenant was also awarded damages for any continuing loss it may suffer as a consequence of the landlord’s various breaches.

It is not known whether leave to appeal will be requested or granted, or any appeal made or won.

Lessons to learn:

  1. Parties to a lease (or indeed any contract) should understand the potential implications of the obligations they are signing up to. It sounds as though the landlord might have difficulty recovering all of the cost of the works through the service charge, and this in circumstances where their 999 year interest will have meant that any opportunity to claim against the development team would expire (relatively) quickly, because the warranties would not be for an equivalent 999 years.
  2. Don’t assume that specific performance will not be granted. It just might; going to court is an uncertain business.
  3. Inspect cladding installations regularly and frequently, even if they are ‘new’.