Changing the rules: CDM regulationsEdward McHugh of Dundas & Wilson looks at the implications of new regulations governing construction projects which will come into force in April.
The Construction (Design and Management) Regulations 1994 (CDM 1994) have been widely criticised for uncertainty about timetables, confusion about the respective responsibilities of the duty holders and the tendency for compliance to be seen in terms of paperwork produced rather than effective health and safety management.
The various requirements placed on the duty holders (Clients, designers, planning supervisors, principal contractors and contractors) were designed to ingrain health and safety management into the "DNA" of the project from conception to completion and beyond and to create a "team" approach to health and safety risk management.
It is widely recognised that CDM 1994 was not delivering the hoped-for results, illustrated by the safety record of the construction industry.
According to the Health & Safety Executive in the last 25 years over 2,800 people have died from injuries they have received as a result of construction work.
New regulations - The Construction (Design and Management) Regulations 2007 (CDM 2007) - will come into force on 6 April 2007. These regulations are designed to reduce construction site accidents by:
- Focusing on the need to plan and manage the work in contrast to the tendency to focus on the paper work;
- Allowing for greater flexibility to accommodate the wide range of contractual arrangements which exist in the construction industry;
- Expressing what duty holders have to do in clearer language;
- Re-emphasising the requirements of cooperation, communication and coordination between different duty holders;
- Making the assessment of competence much simpler.
Approved Code of Practice
A draft Approved Code of Practice (ACoP) has been produced giving practical advice on how to comply with the law.
It contains some useful information, not obvious from the regulations themselves, as to how CDM 2007 will apply in the PPP context. There is no sign yet of the promised industry approved guidance. The Health and Safety Commission's Construction Industry Advisory Committee has set up a sub-group specifically to co-ordinate production of this guidance.
The main changes - The Client
- Can no longer appoint a 'Client's Agent' to assume Client's duties;
- Can elect one 'Client', where there are several Clients involved in a project;
- Must ensure suitable project management arrangements for health and safety remain in place and must allocate sufficient resources (including time) to ensure this is the case;
- Must give designers and contractors proper notice, and pre-start on site, for planning and preparation;
- Has an enhanced duty to ensure that other duty holders have made sufficient arrangements for health and safety; and
- Must ensure that the principal Contractor has adequate welfare facilities pre-start on site.
The CDM Co-ordinator
- Replaces the Planning Supervisor;
- Is required to advise and assist the Client in the discharge of his duties, including the adequacy of other dutyholders' risk management arrangements;
- Is to be appointed as soon as possible after the initial design work/construction preparation begins; and
- Must be appointed before the Designers and Contractors (other than for the preliminary design).
- Must not begin design (other than preliminary design) until a CDM Coordinator has been appointed;
- Must not commence work unless the Client is aware of his duties;
- Must, so far as reasonably practicable, design to eliminate hazards and reduce risks to the health and safety of persons carrying out construction work, cleaning or maintaining the permanent fixtures or using the structure as a place of work; and
- Must provide sufficient information to assist any other Designers and the principal Contractor fulfil their duties.
The Principal Contractor
- Must advise Contractors they appoint how much time is available for the planning and preparation of the construction work; and
- Must not carry out construction work unless the Client is aware of his duties.
The Pre-Tender Plan to be replaced by the requirement for the Client to provide Designers and Contractors with more detailed pre-construction information.
Where there are gaps in the information required, the Client must commission surveys or make 'other reasonable enquiries'.
What this means for public sector procurement projects
Public sector bodies will hold the Client role in the early stages of a PPP project. In the Regulations a "Client" is defined as one who:
- "Seeks or accepts the services of another which may be used in the carrying out of a project for him"; or
- "Carries out a project himself".
This seems to be a broader definition than in CDM 1994 which provided that a Client was "any person for whom a project is carried out, whether it is carried out by another person or is carried out in-house".
Under CDM 1994 it was clear that in a PPP situation the project originator (the public sector body) was the Client. In order to minimise active involvement and delegate the risk of health and safety compliance many public sector projects proceeded on the basis that after financial close the Special Purpose Vehicle (SPV) would be appointed as the only Client, from which date the Client's duties under CDM 1994 were effectively delegated to the SPV.
This was an anomaly under health and safety legislation where this "contracting out" of the duty to comply is exceptional. Recognising that the agency provision caused confusion, particularly with regard to criminal liability, the Client's agent provision has been removed under CDM 2007.
When the draft regulations alone were available, questions had been raised regarding how CDM 2007 would interact with this delivery model. As Client's duties under CDM 2007 are enhanced the retention of the Client's role throughout the project may have been seen as undesirable.
These concerns have been allayed somewhat by the ACoP. This states that "the role and responsibilities of the Client can transfer from one party to another as the project proceeds. This is normally the case when the SPV is appointed to carry out detailed specification and delivery of the project". If the project originator does not wish to remain a Client in respect of the Regulations after the SPV has been appointed, they should make use of the election facility in Regulation eight. Without such an election, the project originator may retain some Client responsibilities."
Where there are several Clients involved in a project, CDM 2007 allows one to elect to be the only Client, and provided the other Client(s) consent in writing, in the main, they no longer have Client duties under CDM 2007.
It might be thought that is unclear what it is about the role of a SPV that brings it within the definition of Client under CDM 2007 and thus able to elect to be the only Client. Is it that from financial close the project is to be perceived as being carried for the SPV and thus it falls within the Client definition as a person who "seeks or accepts the services of another which may be used in the carrying out of a project for him"? Alternatively is the SPV perceived as a person "who carries out a project himself"?
The ACoP gives guidance on identifying the Client if there is confusion. The factors include:
- Who ultimately decides what has to be constructed where, when and by whom;
- Who commissions the design and construction work;
- Who initiates the work;
- Who is at the head of procurement chain;
- Who engages the contractors.
It could be argued that applying these factors to a PPP situation does not make it entirely clear why the SPV is a "Client". Nonetheless it seems likely that, provided the election mechanism highlighted in the ACoP take root, then the public sector body for which the project is being carried out will be able to divest itself of CDM compliance duties from financial close. It might be difficult in a competitive dialogue process to use the election procedure any earlier than financial close. Some might argue that at preferred bidder stage the election procedure could be considered - although that seems risky for a number of reasons, including uncertainty about whether a preferred bidder is a "Client" under CDM 2007.
The public sector body will remain a CDM Client until the SPV is appointed and the election procedure takes place. When drafting project agreements, the public sector body should include a contractual provision requiring the SPV to elect in writing to be treated as the only Client and ensuring that it itself agrees in writing to the election. Given that the principal thrust of CDM 2007 is to enhance Clients’ duties and, in turn to improve health and safety performance, public sector Clients need to be clear about these enhanced duties, how to fulfil them, and consider using the Client election procedure to ensure that the delivery of health and safety compliance is transferred at an appropriate point along with all other project delivery risk. Edward McHugh is a senior associate at Dundas & Wilson.