As another transformative year comes to an end for construction, Womble Bond Dickinson’s lawyers review the industry’s major legal changes in 2024 – and what the sector should expect for 2025.
Firstly, what happened in 2024?
2024 has been, once again, a year of significant developments for the built environment. Five key events and trends were:
- JCT’s much-anticipated 2024 suite published – The latest contracts include new allocations of risk around unexploded ordnances, contaminated materials and asbestos; new relevant events and relevant matters (for extensions of time and claiming loss and expense); a process to resolve disputes early; and alignment with legal developments, including insolvency and building safety. While uptake of previously updated JCT suites took some time as the industry preferred the older, more familiar versions, adoption of 2024 suite has been swift, not least because of the need to include building safety changes.
- Building safety locked in place – After a flood of new legislation and guidance in 2023 and 2024, the legal framework for building safety is now mostly in force, with the last pieces falling into place in April 2024 (we say ‘mostly’ because this is an evolving area). The industry is still getting to grips with these gargantuan changes, and it will take some time before this becomes second nature for the industry.
- A new government with new plans – In the few months it has been in power, the new Labour government has made several announcements that impact the construction industry. New plans include the building of new homes and boosting affordable housing; re-energising renewable and clean energy projects; updating the National Policy Planning Framework; funding infrastructure projects; and reforming the planning regime. Many of these plans put the construction sector squarely at the forefront of change.
- A worryingly high rate of insolvencies – Unfortunately, many construction businesses went under in 2024 – 4,264 in the 12 months to September 2024, according to recent government statistics. ISG’s insolvency, in particular, sent shockwaves throughout the sector, affecting supply chains and delaying major projects. It is reminiscent of Carillion’s insolvency in 2018, and it is yet to be seen whether it will lead to an appetite for legal or industry changes to prevent other company failures in future. In the meantime, insolvency should be considered when drafting your construction contracts, including defining insolvency properly, and understanding what steps you can take in the event of it happening, particularly as this varies depending on the standard form of contract used (JCT, NEC or FIDIC).
- More disputes – There has been a rise in construction disputes this year, especially in relation to remediation of defective works, building safety and insolvencies. It is a natural trend that when things are tougher in the industry, we see more disputes – and the industry has had several difficult years following the covid pandemic, Brexit, global supply chain disruptions, RAAC and more. We expect this to continue into the new year.
What to look out for in 2025?
On top of the events above, construction can expect the following developments in the new year:
- Public procurement and its private sector impacts – The Procurement Act comes into force in February 2025 (delayed from October 2024). This will reform procurement processes for the public sector (which the private sector will tender for), with an increased emphasis on value for money and maximising public benefit. The Act introduces greater transparency into the procurement process and focuses on supplier performance for higher-value contracts.
- More insolvencies – Sadly, the economic outlook suggests that insolvencies will continue into 2025. Construction supply chains will need to stay alert and adopt robust financial strategies to weather challenges of such failures.
- Even more building safety changes – Building safety will remain high on the agenda in 2025, with more changes on the horizon. We can expect more clarification around the new laws and processes (including from the First-Tier Tribunal and the courts) and more enforcement. We may also see further regulations related to construction products.
- Technology – Keep an eye out for advances in technology, including greater use of information management processes; innovation relating to sustainability and the construction industry’s large carbon footprint; upskilling of workers; and AI and copyright issues stemming from the use of AI in design. The recent launch of the Information Management Initiative, spearheaded by nima and the Construction Leadership Council, may also prove to be a significant development next year.
- ESG – Environmental, Social and Governance provisions are already finding their way into construction contracts, and this is likely to increase. Biodiversity net gain requirements came into force in 2024, but we will see more of it flowing through the planning stage in 2025. And with the government focusing on upskilling and training, and construction’s long-term skills shortages, there are valuable opportunities to bring more underrepresented groups into the workforce.
Simon Rowland is the head of the construction team, Simon Lewis is a partner in the construction engineering team and Michelle Essen is legal director (construction) at Womble Bond Dickinson.
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