By Cahal Carvill, Partner and Co-Head of Construction and Engineering, Arthur Cox
With some major legislative, contractual, and policy changes on the horizon for the construction and infrastructure sector, 2024 presents a dynamic blend of challenges and opportunities.
The Stormont stalemate unfortunately continues to slow the pipeline of public infrastructure investment, which remains curtailed by the ongoing political impasse.
According to a recent report from AECOM, public sector work remained subdued due to no significant government-led investment decisions.
On a more positive note, there was significantly higher growth in the independent private sector, particularly from US investors, with 7.8 per cent year on year output growth in private sector construction, most significantly in maintenance and repair (up 17per cent) and infrastructure (up 9.3per cent).
Despite the political inertia in Northern Ireland, recent consultations have been issued in four key aspects of house building, most notably the consultation relating to the acceleration of the restriction on conventional oil heating for new dwellings in NI.
Further consultations relate to the potential impact of revised guidance timing on homebuilders, assessment of proposals affecting homebuilding costs amidst challenging economic conditions and housing shortages, and integration of changes, especially photovoltaic (PV) and electric vehicle (EV) charging infrastructure, ensuring feasible grid connections.
These consultations may see formal legislation being developed around energy-related emissions in the housing sector during the course of 2024 in an attempt to accelerate the journey towards net zero emission targets.
Sustainability and ESG continue to be buzz words in the construction industry in 2024.
Many involved in the construction sector have returned from COP28 with renewed commitments and ambitions to tackle the ongoing climate crisis.
At COP28, the Buildings Breakthrough was launched, an initiative which seeks to strengthen international collaboration around decarbonisation of the buildings sector, with the target being near zero emissions and resilient buildings by 2030.
The construction industry will also have a significant part to play in the Department for Agriculture and Rural Affairs’ 2023 and 2040 Emissions Reduction Targets and First Three Carbon Budgets.
The Department for the Economy is also progressing with its Draft Circular Economy strategy in 2024 which will require the construction industry to play a pivotal role in the transformation from a linear to a circular economy.
The most obvious contributions being the continued increase in the repurposing and redevelopment of derelict and vacant commercial buildings.
Key provisions of the Building Safety Act 2022 (‘BSA’) came in to force in England and Wales in October 2023 and 2024 will see further implementation of the legislation with new rules for duty holders fully taking effect.
Although the whole of the BSA does not extend to Northern Ireland, there are certain elements of the new regime that do apply here, such as the adoption of the New Homes Ombudsman Scheme.
The New Homes Ombudsman has already held a number of roadshow events in Northern Ireland highlighting her services, including dispute resolution and compliance, and the roll out of the New Homes Quality Code for developer and new homeowners.
We expect to see more activity from the Ombudsman in Northern Ireland in 2024.
The much-anticipated Phase 2 report from the Grenfell Inquiry is due to be published in 2024 and is expected to criticise certain participants in the processes that led to the buildings non-compliant cladding.
The report will not only have a significant impact at regulatory level, but upon all aspects of the construction industry, particularly those focused on high-rise developments, of which there are a growing number receiving planning approval in Northern Ireland.
The Public Procurement landscape will change significantly in 2024 following the UK Government‘s review of the procurement regime post-Brexit.
This review has resulted in the development of the Procurement Act 2023 which is expected to come in to force in Northern Ireland in October 2024.
This 2023 Act will replace the current Public Contract Regulations 2015, the Utilities Contracts Regulations 2016, along with the Concession Regulations 2016, amounting to the biggest change in public procurement in Northern Ireland in the last decade.
Lastly, Spring 2024 will also see the publication of the long awaited JCT 2024 Edition suite of building contracts.
The suite is to include a new JCT Target Costs Contract, updated to reflect the Building Safety Act as well as new insolvency grounds and the objectives of the Construction Playbook.
This will be an interesting development given the widespread use of the JCT form of contracts in Northern Ireland.
With all of this change coming in 2024, the construction industry will remain an interesting and dynamic sector.
However the demise of Tolent and Buckingham Group in 2023, as well as other tier one contractors reporting major losses, provides a reminder of the challenges the industry faces, challenges which will no doubt continue throughout 2024.