The document discusses steps that developers, contractors, subcontractors, and consultants involved in construction projects should take to review and mitigate risks in light of the Grenfell Tower fire tragedy. Key steps include: 1) Ensuring collateral warranties can be obtained from contractors and designers and that adequate insurance is maintained. 2) Contractors and subcontractors should thoroughly review materials specified for safety and statutory compliance and avoid warranties regarding employer-specified materials. 3) Consultants should thoroughly review specified materials, raise safety concerns with clients, and carefully review warranties given during novation. 4) All parties should review internal procedures to ensure compliance with regulations and industry standards regarding product suitability.

1. Why there is no excuse for not reviewing contracting risk
after Grenfell
The terrible human tragedy of the Grenfell Tower fire is a sobering reminder of the duties held
by our institutions, industry, and fellow citizens, to uphold public safety.
A full public inquiry has been announced. In the meantime, the more immediate investigations
by local authorities, police and emergency services continue.
According to most news sources, the source of the fire was a fridge freezer and that it was not
started deliberately. Those same sources have reported public outcry as to how the fire spread
so quickly out of control, leaving residents barely with a chance of survival.
Spotlight on unsafe construction materials – what the experts are saying
Initial investigations have revealed more than a mere unfortunate accident; rather a systemic
failure leading to a disaster that some residents claim was waiting to happen. Worryingly, a
number of the building components have failed safety testing. Both the insulation and external
cladding have been reported to have failed safety tests. Safety testing on the insulation showed
it to be “more flammable than the cladding” and that they combusted soon after the tests
started.

2. Manufacturer of the cladding, Celotex, confirmed that the insulation (which has now been
discontinued) would have released "toxic gases" if it caught fire. Professor Richard Hull,
Professor of Chemistry and Fire Science at the University of Central Lancashire has said that
“the materials used to refurbish the Grenfell Tower in 2016 made a major contribution to the
rapid spread of the fire and the toxicity of its smoke," Professor Hull said that "Unlike ships,
trains or aircraft, where fire toxicity is regulated because it is accepted that escape may not be
possible, the UK and most of Europe have no regulations on the toxicity of fire smoke from
construction products, even though escape from a high-rise building may be equally
impossible."
It has also been reported that similar products to those used in the Grenfell Tower have been
banned in other jurisdictions. For example, under the US building code, the use of metal
composite panels which do not contain a fire-retardant core has been banned since 2012 on
buildings above 50 feet tall (15m) in various circumstances including where exterior walls are
required to have a fire-resistance rating as well as in restaurants, care homes, hospitals and
concert halls. In the UK, it has estimated since the fire, that at least 600 buildings are fitted
with combustible cladding. Already, around 130 samples from similar buildings have failed
safety testing.
Investigators of Grenfell are also analysing the aluminium composite tiles which also
reportedly failed testing, and the sprinkler systems that may have prevented the spread of the
fire.
The potential scope for liability arising from the incident seems enormous, but until sufficient
facts come to light through the investigation and the public inquiry, it is premature to speculate.
In the meantime, there can be no doubt that all participants in the construction industry must
immediately review their roles, responsibilities and risk profiles, to ensure the protection of the
public, the safety of their employees, and their business. The following is a discussion of how
certain of the industry’s key participants may achieve that.

3. Developers – reviewing your risk
Developers of residential premises will usually have standard sale contracts that contain limited
rights of action for the purchaser against other project parties, unless the developer has been
able to procure collateral warranties from contractors.
Where they cannot, the traditional rule of “buyer beware” applies. Whilst the seller of property
cannot make untrue statements or representations, he/she is under no obligation to disclose
material facts to the purchaser. The only exception to this is if the seller is aware of latent
defects in title or issues relating to the property, which the purchaser could not reasonably
discover by inspection.
Developers of residential and commercial premises should:
 ensure at an early stage of the procurement process that collateral warranties can be
obtained from contractors and design consultants that any designed portion has been
carried out in accordance with the developer’s requirements, that materials and goods
used are fit for their intended purpose, and that workmanship shall be in accordance
with the contract and with reasonable care and skill;
 ensure adequate levels of public liability and professional indemnity insurance are
maintained by contractors and consultants to reflect both the risk profile of the works,
and are proportionate to the value of the works; and
 ensure that, under a design and building contract, its preliminary design consultants
are formally and properly novated to the main contractor, wherever possible.

4. Reminders for Contractors and Subcontractors
The particular materials and goods to be used by a contractor are not always determined by the
contractor, and may depend on the design obligations undertaken by the developer (and its
consultants) and the contractor respectively.
Where design obligations are undertaken by the contractor, for example under a JCT Design
and Build 2011, the obligation will be to carry out any design, including the selection of any
specifications for the kinds and standards of the materials, goods and workmanship to be used
in the works, in accordance with the contractor’s or the employer’s requirements, as the case
may be. In respect of any inadequacies in sub/contractor designed works, the sub/contractor
shall have the like liability to the employer or contractor (as the case may be) as would an
architect, or other professional designer holding himself out as competent to take on such work.
Otherwise, where no design obligations are undertaken, the general obligation is to carry out
and complete the works in a proper and workmanlike manner and in compliance with the
contract documents, the construction phase plan and other statutory requirements. With respect
to materials and goods, they are required to be of the kinds and standards described in the
contract specification and/or work schedule.
On either scenario, the use of materials and goods is subject to the general obligation of
compliance with statutory requirements. Statutory requirements are typically defined very
broadly and include, in most standard form contracts, virtually any statute, instrument, rule or
order having the force of law, and any regulation or bye-law of any local authority or statutory
undertaker which has any jurisdiction with regard to the works. Separately, the Defective
Premises Act 1972 imposes a duty on a contractor building a residential dwelling, or converting
or enlarging an existing dwelling, to ensure that building work is done in a workmanlike
manner or, as the case may be, professional manner with proper materials, and so that, as
regards the work, the dwelling will be fit for habitation when completed.

5. Contractors are often required to provide collateral warranties to purchasers, tenants, funders
and occasionally other parties. In addition to a general warranty that the contractor has carried
out the works in accordance with the contract, standard contract forms such as the JCT 2011
require that the contractor warrant that, with respect to the use of materials, he has not used and
will not use materials other than in accordance with the guidelines contained in the edition of
‘Good Practice in Selection of Construction Materials (Ove Arup & Partners)’ current at date
of contract. Other bespoke forms of collateral warranty may include broader warranties
including that the contractor has carried out the works with due care and skill, which may
expose the contractor to a claim for breach of warranty or negligence, by subsequent purchasers
or other third parties.
Risk mitigation for a contractor should include at a minimum:
 thoroughly reviewing the materials and goods nominated in the specifications or
employer requirements (or any tender design), by reference to all statutory
requirements, and any other codes, guidelines or standards required by the contract.
Under no circumstances should sub/contractors provide warranties as to compliance
standards or codes unless familiar with them;
 avoiding any warranties to the employer with respect to the adequacy or fitness for
purpose of any design undertaken by the employer, or materials nominated by the
employer;
 raising any concerns about the safety or suitability of any materials specified by the
employer, with the contract administrator and/ or the sub/contractor’s own design team
or consultants;
 seeking specific advice from manufacturers or industry bodies where appropriate, in
the case of any doubts as to the safety or suitability of any products to be used;
 carefully reviewing the terms of any collateral warranties to ensure that no greater
liability is assumed to beneficiaries than under the main or sub-contract; and
 in consultation with an insurance broker, reviewing insurance coverage to ensure that
it: (i) reflects obligations under the contract and any collateral warranties; (ii) covers
loss suffered by the use of any materials that do not comply with statutory requirements;
(iii) covers any contractually-assumed risk under the contract and/or any collateral
warranties given.

6. What about consultants?
Professionals such as architects, engineers and other designers are also subject to an obligation
at common law to exercise reasonable care and skill, to the standard of a reasonably competent
professional in that field. Under standard form professional consultancy agreements such as
JCT’s CA 2016, the consultant is required to perform the services in accordance with the
Client’s Brief, and shall carry them out in a manner that complied with Statutory Requirements
and is consistent with the Cost Plan, the Programme and any Third Party Agreements.
With respect to the specification of materials, unless required by the contract, or otherwise
authorised by the client or the lead consultant, the consultant must not select, or permit the
selection of, materials for the Project other than in accordance with the ‘Good Practice in the
Selection of Construction Materials’ current at the date of the contract.
There is also an implied term that the building as designed, will be fit for its intended purpose.
Express provisions of an agreement may impose further obligations.
Consultants are also typically required to give collateral warranties to purchasers, tenants, and
funders, in a similar scope to that required of contractors.
Risk mitigation steps for a consultant should include:
 thoroughly reviewing the safety and suitability of all products specified, by reference
to up-to-date guidelines, standards and codes. The consultant should raise any concerns
with the client as to compliance with the Client’s brief and budgetary restraints.
 reviewing internal procedures to ensure that there is a reliable system for distributing
up-to-date information concerning any changes to regulations or industry opinion on
suitability of products; and
 where a consultant’s design is novated to the contractor, consultants should carefully
review any warranties given as the outgoing party. In particular, care should be taken
that any warranty given to the contractor that its services complied with the original
contract does not create a gap in insurance cover, as many professional indemnity
policies exclude indemnity for contractually-assumed risk.

7. Review your procedures!
It is unfortunate that it often takes a catastrophic event to sheet home the importance of what
should be part and parcel of the risk analysis on any construction project. It is a reminder of
not only the need to review the selection of common building materials such as cladding,
insulation and tiling (and to closely monitor changes in the permitted use of those products)
but also the need to tighten procurement procedures and risk mitigation as a whole.
The above steps are intended by way of general guidance only. It is always recommended to
assess risk on a project by project basis, and to seek professional advice.