Review your contracts for potential RAAC liabilities

While last month’s notices of school closures amid concerns about reinforced autoclaved aerated concrete (RAAC) came as a shock to those affected, the construction industry – and the government – has long been aware of its limitations.

In 2022, the government went as far as to issue a safety alert on the dangers posed by the material. Furthermore, the Department for Education’s 2021/22 annual report placed the risk of collapse as “very likely” during the course of that year. Despite these concerns, no action was taken until September 2023, just days before the new school year began.

In the wake of the cladding crisis and the decision to pursue developers to secure the capital required to fund the necessary remediation works, there are concerns in the construction industry about who will pay for this latest crisis.

We should not assume contractors and professionals are out of the woods so far as historical projects are concerned – while limitations of time and responsibility will apply, it is possible the government could mirror its approach to unsafe cladding, retrospectively extending liability to claw back funds if appropriate or able to do so.

It is very difficult to predict how this will play out, in both the short and long term, but it is clear that the costs to remedy the situation will be substantial.

While the contractor may at first appear the obvious target for any potential legal action, there are a host of parties that could find themselves under fire

Although the government moved quickly to reassure concerned parents that no expense would be spared in repairing affected buildings, it made clear that a new pot of cash will not be set aside to fund it, with the capital being taken from the current education budget. This is likely to prove extremely unpopular with educators, parents and voters, raising the likelihood the Treasury will need to find the funds elsewhere.

It’s not inconceivable that the government will look to the construction industry, in which case the potential liabilities could be extensive.

While the contractor may at first appear the obvious target for any potential legal action, there are a host of parties that could find themselves under fire, including architects, surveyors, project managers and engineers.

Any organisation with previous involvement in RAAC projects would be advised to establish its position and level of exposure. For example, how many projects include RAAC and have any of those been identified in the recent audit process?

Were the designs and specifications for projects using RAAC issued alongside guidance on its lifespan and warnings? Were potential risks addressed at the time and was the end user made aware of its limitations in comparison with alternatives?

In the event of a complex legal dispute arising around the failure of RAAC within a building, it will be important to have access to contractual documentation and any relevant files relating to the project. Businesses should ensure that the necessary files are available and on hand to prevent delays and assess the company’s position. Involved parties could well be approached to assist with investigations and inquiries.

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Any contracts from the relevant period should be revisited and professional indemnity insurance cover should be reviewed carefully as a first port of call.

Given the timeframe involved, it is likely that many companies will no longer exist. RAAC has been used in a range of buildings since the 1950s, which will complicate not only any process of seeking reparations but also the obtaining of relevant files and information to establish liability.

The process could be frustrated further by the presence of asbestos within affected buildings, making it difficult to complete remedial works and complicating the issue.

There is no doubt that the future of non-education buildings containing RAAC will also be called into question, affecting their redevelopment potential. It has already been reported that a second court has been forced to close over RAAC safety fears. This in turn will create additional risk for developers and contractors as well as those tasked with the maintenance of these structures. Future valuations will also be impacted.

While the government is focused on schools and getting children back into classrooms, we may well see the scope broaden to other public sector buildings including hospitals and leisure facilities. It is a complex issue that will not find a speedy resolution, but those contractors, architects, engineers and surveyors involved in the design and delivery of projects using RAAC should ensure that they are on the front foot and adequately prepared to deal with any resulting inquiries.

Sheroze Nadeem is an associate at Forbes Solicitors