On 03 July 2023, a number of amendments to the Public Works Contracts were announced, which include:
The new clauses for the Liability Cap and Price Variation apply to tenders received on or after 27 July 2023.
Employers must now add a monetary amount (the “Liability Cap”) to the Form of Tender and Schedule. Where no monetary amount is added to the Schedule the Contractor’s liability shall not be greater than the Contract Sum.
Section 2.2 of Guidance Note 2.3.5 provides detailed descriptions of the exclusions the Liability Cap is subject to.
Clause PV1 which was based on the proven cost method e.g. invoice based calculations, has been removed from PW-CF1 to PW-CF5 and replaced with Clause 15. Clause 15 calculates adjustments to the Contract Sum on the basis of movements of the Central Statistics Office Wholesale Price Index for fuel and materials.
Fluctuations in the price of labour will no longer be calculated on the basis of the Consumer Price Index. Instead, any adjustments will be based on changes in the rates of sectoral employment orders made two years from the Designated Date.
Similar to the amendments introduced to the SAQs for Service Providers last year, Amendments to SAQs QW1 to QW4 for Contractors have also been introduced. The objective of the revised SAQs is to:
ICMS is being introduced across the National Development Plan. ICMS not only enables the reporting of costs, life cycle costs and life cycle analysis but it is also the first globally consistent method for measuring carbon life cycle reporting across construction projects.
In addition, a Public Sector BIM Adoption Timeline was introduced and comes into action from January 2024. In short it mandates that:
The introduction of Liability Caps for Contractors is welcomed. This amendment largely reflects some of the contractual practices now seen in the private sector. Any contract which can more efficiently allocate risk to Contractors should achieve better value for money.
The Price Variation amendments are likely to be welcomed by Contractors as material and fuel price increase claims can now be made without having to provide commercially sensitive information to the Employer such as invoices and purchase orders. In addition, it is in neither of the parties’ interest for the Contractor to fall into financial difficulties, due to the Contractor being unable to claim for any price increases.
The changes to the SAQ structure will be welcomed by SMEs in particular as they lessen the administrative burden and Contractors can more easily rely on the resources of other entities.
It is estimated that approximately 37% of Ireland’s carbon emissions are from the construction and built environment sector with 23% resulting from operational emissions and the remaining 14% coming from embodied carbon[1]. Ireland has yet to introduce any regulations governing embodied carbon, so the introduction of ICMS and BIM to improve its measuring is a step in the right direction to achieving Irelands ambitious goal of a 100% reduction in net zero greenhouse gas emissions by 2050.
The PWC typically has a negative perception among the construction industry. However, its recent amendments are welcomed and will hopefully improve its reputation by bringing the PWCs more in line with the contractual practices used in the private sector whilst greatly assisting with Irelands climate action goals.
[1] Joint Committee on Housing, Local Government and Heritage, Embodied Carbon in the Built Environment, October 2022
Published 5 August 2024
