On 23 April we were pleased to participate in the Association of Consulting Engineers of Ireland (ACEI) Annual Conference at Dublin’s Guinness Storehouse for what proved to be an insightful and enjoyable event. An excellent range of speakers examined challenges and opportunities on engineering sustainable solutions to Ireland’s Climate, Infrastructure and Housing challenges while Keynote speaker, Roni Savage, provided thought-provoking insight into equity, diversity and inclusion.
Griffiths & Armour Europe CEO, Graeme Tinney, joined a panel discussion on ‘Building our Sector’s Capacity’, reflecting on how current approaches to managing and funding risk are acting as a barrier to innovation, collaboration and delivery. The full discussion can be viewed here.
As Professional Indemnity Brokers, he explained that our primary focus is the risk landscape for construction consultants. As well as continual pressure on fees, Graeme highlighted the continuing prevalence of a ‘Risk Dumping’ mentality, with far too much risk being forced onto consultants. That imbalance of risk vs. reward is having a significant impact on sector capacity, with:
- Many consultants choosing not to tender for certain projects/work types or being prevented from doing so because they are unable to source adequate or effective insurance protection
- Many overseas firms reluctant to operate within the Irish market
- Tighter margins impacting directly on salary levels, reducing the sector’s ability to attract sufficient numbers and the best talent
The primary sources of the imbalance were identified as the hardening contractual landscape and the impact of joint and several liability; a system that:
- Continues to drive claimant behaviour and a scattergun approach to litigation
- Takes no account of dynamics and relationships within the construction industry
- Is completely out of line with many other jurisdictions, where liability is proportionate or there is widespread use of Net Contribution Clauses
- Significantly impacts insurer appetite, contributing to the instability and uncertainty that characterises the local insurance market
A moment of opportunity?
Despite the challenges, it was suggested that this is a moment of opportunity. The existence of a vibrant local consultancy sector, and the ability to attract overseas resource, will be central to achieving our ambitions under the National Development Plan but we need to have an honest conversation about how we can support that through the fairer allocation of risk, better insurance solutions and structures that support collaboration.
Pointing to the creation and introduction of the Building Control Amendment Regulations and more recent discussions with the Office of Government Procurement on PI requirements and liability caps (as evidence of what can come from positive dialogue), Graeme called on all parties to ‘keep talking’. It surely cannot be right that certain agencies seem unwilling or unable to engage and it is not in anyone’s interests to adopt a siloed approach – we have previously talked about these challenges being a shared responsibility and finding solutions is going to require input, imagination and commitment from the construction, insurance and legal sectors as well as procurement authorities.
In our forthcoming Whitepaper, ‘Constructing Change: Evolving the status quo or time to reset?’, we explore what some of those solutions might be and we hope the publication will serve as a catalyst for continued and positive dialogue.
In some ways, the challenges are as complex or as simple as we wish to make them but what lies at the heart of everything is ‘fairness’ and recognition of value. For a sector that will continue to be at the centre of tackling some of the country’s most pressing challenges, is it too much for people to expect reasonable fees with a level of risk that is not completely disproportionate and potentially catastrophic?
For further information on how Griffiths & Armour can help support your organisation, please get in touch.
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