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Managing
environmental risks in
construction
contracts
June 13, 2016 By Guest Blogger — Leave a Comment

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How do environmental provisions in

construction contracts work in
practice? Andrew Waite, environmental
law consultant at Ashurst, and Michael
Weissman, senior associate in Ashurst’s
construction team, comment on the key
environmental concerns and risks in
building contracts.
What are the key environmental concerns in
construction
! $ projects?
% & ' #
The key environmental concerns in UK construction
projects are:

contamination—particularly, whose
responsibility it is to deal with and pay for
historic contamination on the site
waste—including minimising waste and reusing
material onsite as far as possible as well as
managing waste arising in accordance with
legal requirements
water pollution—water pollution from
construction sites is a major issue
nuisance claims and noise (these can be the
subject of intervention by the local authority—
section 60 construction site noise notices—as
well as complaints by neighbours)

What environmental provisions are

commonly being found in building
contracts? How is risk apportioned between
the parties?

Environmental provisions in building contracts for

relatively sophisticated projects commonly put the
responsibility for minimising or avoiding liability
relating to environmental issues on the contractor.
Although commonly used standard forms of
construction contract do not directly refer to speciLc
environmental issues, employers/developers will
often introduce provisions through the schedule of
amendments.

With regard to contamination, well-advised

employers would normally seek to place the risk on
the contractor although there is often some
negotiation. Contractors will be keener on accepting
only ‘known risk’. If, as is usual, a level of risk as to
ground conditions is placed on the contractor, there
may be some qualiLcation to that position. For
example, under the relevant ‘compensation event’ in
respect of physical conditions under the NEC
contract (clause 60.1(12)), it is assumed that the
contractor has taken into account various site
information and publicly available information,
information obtainable from a visual inspection of
the site and other information which an experienced
contractor could reasonably be expected to have or
to obtain.

By contrast, the unamended JCT contracts (with the

exception of the JCT Major Project Construction
Contract) are silent on ground conditions and
assume that the contractor takes on the
responsibility for having to deal with unanticipated
conditions. The precise wording will depend on the
particular standard form/amendments to it and the
relative sophistication of the parties. In some cases,
employers/developers are prepared to accept a
degree of risk if they have experience of dealing with
land contamination. However, the normal approach
of employers and developers is that the risk should
rest with the contractor because the contractor has
the operational responsibility for it.

How about development agreements?

In development agreements, the environmental risks

(including contamination) are typically placed on the
developer in the expectation that they in turn step
them down to the contractor.

Although the standard forms tend to be drawn up by

construction industry bodies, ultimately the
environmental provisions in the contracts that we
frequently see/negotiate tend to be driven by the
requirements of the employer or developer as
appropriate.

How receptive are contractors to their

inclusion?

Usually, contractors are relatively amenable to taking

on the environmental liabilities, including those for
contamination, but that depends to a large extent on
how comfortable they are about the risk, and on the
negotiation of price between the contractor and the
employer. For example, if the site has been
remediated previously by reputable contractors they
are much more likely to be prepared to take on the
risk—subject to doing investigations and obtaining
site reports and other site information that they can
rely upon.

How are environmental issues being

managed in the supply chain?

Increasingly, suppliers up the chain are being required

to provide materials which are sustainably sourced.

How controversial does the wording of the

provisions prove in negotiations?

While the standard wording tends to favour

contractors, there will inevitably be push back/mark
up on behalf of developers and employers. As noted
at above, these parties will often seek amendment of
the standard forms to make them more favourable to
their position. It will no doubt be in both parties’
interests to ensure that environmental liabilities are
kept to a minimum.

Interviewed by Nicola Laver.

The views expressed by our Legal Analysis

interviewees are not necessarily those of the
proprietor.

Filed Under: Construction, Environment

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NICOLA JOHNS

Solicitor and Head of LexisPSL

Built Environment

Nicola is a commercial property

lawyer who joined Lexis®PSL in
September 2013. Nicola qualiLed as
a solicitor in 2004 and trained and
gained her post-qualiLcation
experience in the London o`ce of
US law Lrm Dorsey & Whitney
before joining SJ Berwin LLP (now King & Wood Mallesons)
in July 2008. Nicola has a range of commercial real estate
experience in portfolio management, transactional work and
development work. Nicola has worked across a number of
industry sectors including industrial, o`ce and retail,
undertaking secondments at Daimler and The Crown Estate.

CATEGORIES

Construction (57)

Environment (74)

Planning (43)

Property (117)

Property Disputes (1)

Uncategorized (7)

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