Retrofitting and Contractual Arrangements

Blog Author: Peter Hibberd

This article is primarily concerned with the manner that retrofitting of buildings might impact on the procurement for its delivery, and whether adequate standard form contracts exist.

Simply put, retrofitting of buildings is the introduction of new or modified parts or equipment not available at time of build. Contrast this with repair, which is only to restore something broken or damaged to a good condition or working order. Also, contrast it with renovation and renewal, which restores to a new or fresh condition and often includes a measure of improvement.

Retrofitting has different angles, for example, the driver for the Technology Strategy Board’s publication ‘Retrofit for the Future’ is the need to reduce energy use and carbon emissions. Others use sustainability, which is much wider, as the driver. Sustainability embraces the concept of retaining buildings and their repurposing through adaptive reuse. Where appropriate it adapts existing buildings, rather than demolish and rebuild. Other important drivers of retrofitting are the improvement of living and working conditions and improving operational aspects within organisations. Although retrofitting plays a large part in residential buildings it is also relevant to other buildings.

Altruism alone is seldom enough to make progress; an economic driver is necessary, particularly with non-residential buildings. Economic benefit must arise. This often depends upon the ownership of the buildings for retrofit. Homeowners, home occupiers, private or public companies or the public sector have the same primary objective, but the scale of the work and its implementation varies enormously.

Delivery of any retrofitting programme is not only dependent on suitable and cost-effective technical solutions in respect of the building itself but also on finding suitable means of delivering such work. Ownership of buildings together with the nature and scale of the retrofit project are significant factors in the procurement of the works and in determining appropriate contractual arrangements.

A principal issue concerns whether the retrofit primarily involves specialist engineering work or just straightforward building works. However, even in situations where someone sees the work as purely specialist, e.g., installation of a heat pump, there is associated building work.

Whether the premises are vacant or occupied is relevant because of the greater health and safety concerns of occupation. Those concerns and other practical difficulties that the occupants might encounter, where they remain in situ, may lead to decanting, extensive protective works, and restricted hours of working. Factors the procurement process must take account of.

The things that influence the precise nature of retrofitting work, include energy performance requirements, availability of funding, grants such as the Green Homes Grant Scheme, and technical expertise. Building ownership and the number of properties involved are relevant. PAS 2035:2019 is a code of practice that sets out a framework of best practice for the implementation of energy retrofit measures to existing buildings in the UK. It is an important document in guiding the process of procurement but interestingly it does not mention contract. The intention of the following is to fill the gap.

Procurement of work for a homeowner on their own property is significantly different to that of an organisation or public body that has hundreds of dwellings to retrofit. As is work on a large commercial building in sole ownership, compared to school buildings. Each requires a different procurement approach that involves the selection of a particular contractual arrangement.

The considerations for any contractual arrangement, and more specifically the contractual documentation, are not dissimilar to other building works; it is a matter of dealing with process and risk. Take for example; insurance of the works, how one provides protective works, or guarantees for specialist inputs. It is a matter of matching a contract with the objectives and specific requirements of the project. A good place to start is JCT’s publication ‘Deciding on the appropriate JCT contract’.

For homeowners who are residential occupiers there are specific contracts, namely the Building Contract for a Home Owner/Occupier, which is available in two versions, one where no consultant is appointed to oversee the work, the other with a consultant. These contracts oblige the homeowner to notify their insurers, which highlights working in an occupied building. Such contracts are only suitable for small scale retrofitting. Once the works become larger and more complex one should look to the principal JCT forms of contract, regardless of whether the work is for a homeowner or other contracting party. The next tier is the Minor Works Building Contract or its contractor’s design version, followed by Intermediate Building Contracts. Whether a contractor takes responsibility for design is determined by the character of the retrofit.

For the larger scale retrofitting, involving large numbers of houses by a housing association or complex services on commercial works, consideration should, in addition to the building contract, look at the desirability of using a framework agreement, for example, together with the Measured Term Contract. Certain types of large-scale work of complexity could also usefully employ a pre-construction agreement, such as either the Pre-Construction Services Agreement (General Contractor) or the Specialist version, in conjunction with a main form of contract. Those include the JCT Standard Building Contract, Design and Build Contract, and Major Project Construction Contract. There is a variety of options that suit most situations, and all the principal forms referred to, cover insurance in existing buildings, health and safety requirements and sustainability. All especially important for retrofit.

Hindrances to the successful uptake of retrofitting are varied but one thing that does not hinder, is the availability of standard form building contracts. When there is an appropriate contract together with properly prepared contractual documentation supporting it, there is no need for specially drafted bespoke contracts.