Virtual Architects’ Roundtable – February 2021

On 9 February, Beale & Co were delighted to host its latest Architects’ Roundtable for professionals in the industry. With the continuing COVID-19 circumstances, this was second Architects’ Roundtable to be held virtually.

The roundtable provided an opportunity for architects to reflect on the key issues, some new and some prevailing, that are affecting the industry and to debate the challenges of today and the future.

The roundtable focussed on four main topics:

• What Brexit means for architects
• COVID-19 and prolongation
• Fire safety risk
• The current contractual market

A summary of the discussions is provided below. A further roundtable will be arranged in due course to follow up the points raised in these discussions and highlight new developments in the industry.

1. Brexit

It was considered that the total impact of Brexit may not yet be fully felt, as the ongoing COVID-19 challenges may be masking the hurdles during the period where hiring international staff, or bidding and working on international projects, is limited.

A key topic was the end of mutual recognition of architects’ qualifications following Brexit (see this article). It was acknowledged that the professional bodies are trying to come to arrangements with individual EU member states, such as the  memorandum of understanding entered into between the ARB and Ireland’s RIAI.

In the absence of any agreement with other EU member states, architects should check the legal requirements of the member states to ensure they are providing services legally, including checking whether the word ‘architect’ and/or the provision of architectural services are protected.

It was noted when bidding on some EU projects that some invitations to tender expressly required bids to come through a European Economic Area-registered entity so UK architects will need to consider alternative contractual structures (such as joint ventures with local architects) before working in the EU.

Concerns were raised with costs and administrative processes associated with tax issues with payroll of employees working remotely in the EU, as well as insurance issues with employees stuck working abroad.

The roundtable had seen a decline in international candidates applying for positions. This could cause such practices to lose international perspectives in their designs. Fortunately, some participants are still receiving applications from international candidates.

2. COVID-19 and Prolongation

The roundtable was reminded of the ARB guidance on working during lockdown, and flagging the CIC guidance made available throughout the pandemic.

The importance of maintaining a running dialogue with clients and stakeholders in relation to the impact of COVID, and of complying with contractual requirements, was also emphasised. This is an important consideration for architects who wish to recover prolongation costs resulting from the various lock-downs.

As was considered in the recent Beale & Co webinar in relation to prolongation, the pandemic has increased the importance of negotiating in prolongation rights into architects’ appointments and of managing appointments throughout the project to protect rights and avoid challenged fee claims from clients.

It was acknowledged that some prolongation claims for additional fees have been successfully fought, but it can be a challenge. Generally, clients have been reasonable when accepting time extensions but have been resistant to claims for additional fees.

Whilst most architects were able to transition staff to working remotely, it was not without faults. First, there is a risk that mandatory remote working is affecting quality control procedures.

The difficulties of site visits and monitoring progress on site was also discussed, with in some cases virtual site visits being carried out which rely on an individual on site operating the cameras.  It was highlighted that it is crucial to have records in place of the extent to which any visits have been carried out.  The importance of  disclaimers and caveats where checking/inspection practices are been changed to reflect social distancing requirements was also emphasised.

Another unintended consequence of the extended remote-working arrangements was a negative impact on creativity. Architects invest in their workspace to provide an environment to their staff that fosters creativity. Many employees, but especially the junior staff, may not have access to such an environment at home and therefore risk not being as productive or creative.

There have been cases of international projects being cancelled entirely where an architect’s firm had staff on site who were required to be returned to the UK due to fears of a mandatory lock-down.

It was then queried if COVID-19 can now be considered a “force majeure” event going forward? The pandemic and the responses of many governments around the world are no longer “unforeseeable”. This underlined the importance of making sure an architects’ appointment clearly states that the architect will not be responsible for COVID-19 delays and including a clear and sufficiently wide force majeure mechanism in appointments.

3. Fire Safety

The roundtable recapped the risks associated with Form EWS1 and the difficulties of some tenants not being able to sell their properties or secure mortgages.

It was agreed that architects should resist signing the Form EWS1 due to the onerous nature of the form and professional indemnity insurance implications of doing so. See Beale & Co’s publications on Form EWS1 found here. and webinar discussing Fire Safety and Form EWS1 found here.

The draft Building Safety Bill was also reviewed. Architects will need to watch for the developments in the proposed CPD requirements and competency requirements, including any chances the Bill may have to the Architects Registration Act.

There are some positive reactions to the competency requirements in the draft Building Safety Bill by those who want to see a return to the architects’ industry taking ownership of design expertise. It was viewed that it could create a clear quality divide between architect firms and design & build contractors producing designs internally.

Other roundtable participants agreed with this sentiment, but are still worried about the scope of sub-standard work currently out in the market. It was viewed that there is likely to be a big shock to the market once the competency requirements come in.

It was discussed that exclusions and limits from  professional indemnity insurance cover for fire safety liability has now become market standard in the UK. Many architects therefore now seek to exclude this liability in their appointments.

Concerns were also raised about notifying clients on projects that have completed but are still within the liability period, as well as current live projects, on the changes to the architects’ insurance cover following the latest renewal season.

The roundtable was reminded to audit previous projects to see what outstanding liabilities may be present, and if they are no longer in line with the architects’ professional indemnity insurance cover.

4. Contractual Market

It was noted that the contractual market is becoming increasingly difficult with architects being asked to take on greater responsibilities in increasingly complex contractual frameworks. See Beale & Co’s webinar on the hardening contractual market, found here.

The roundtable also discussed the RIBA Professional Services Contract 2020 and found it useful for architects. The main change noted was the approach to fire safety and insurance and the acknowledgement that cover for fire safety may be at a lower level.  See Beale & Co’s article on the 2020 RIBA PSC found here.

It was agreed that given the increasingly hardening insurance market, it is now more important than ever to push for contracts to include a caveat to any insurance requirements being subject to being available on commercially reasonable rates and terms.

It was noted that some particularly difficult clients are debating on what is considered “commercially reasonable”.  This highlights the importance to record evidence of attempting to go to the market to maintain cover, quotations and conversations with brokers to justify that cover is not available at required levels either at all or without a significant increase in premium.

The difficulty in explaining to clients how aggregate limits of insurance cover operate was also discussed, in particular that an aggregate limit in a professional insurance policy applies across all projects during the policy period. This may be due to the previous contractual market standard of requiring professional indemnity insurance to be maintained on an “each and every claim” basis of cover.

The roundtable raised a concern that the current focus on fire safety/liability exclusions in contracts and in professional indemnity insurance market is creating the risk of constantly looking backwards rather than considering the next big topic.

This resulted in a wider discussion on the issue of managing a growing scope of liabilities, including those outside of cover. In particular, it was mentioned that it is increasingly common for architects to be required to enter into multiple appointments in relation to the same project.  It was suggested that architects should not just look at the risk in any particular contract, but also assess the risk in relation to the project as a whole. One suggestion was to consider creating project-specific entities to compartmentalise the risk.