Restarting stalled projects poses risks says firm
Last month, law firm Taylor Wessing in Dubai hosted a seminar entitled ?Ghost Buildings Past, Present and Future? highlighting the structural risks incurred when works are restarted on a stalled construction site and investigating who responsibility falls on if a building collapses
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There are a number of risks and legal disputes involved in restarting construction projects that may have been stalled due to the impact of the global economic downturn, law firm Taylor Wessing stated at its recent ‘Ghost Buildings Past, Present and Future’ seminar
The firm highlighted key structural issues such as rusting of structural steel and deterioration of concrete. It said the risks could be heightened depending on the length of time the construction site was left stalled and exposed, the protective measures taken to limit deterioration of the stalled site and the stage of construction the project was at when it was put on hold.
For example, works stopped at shoring stage pose the risk of failed shoring when restarted, while if a construction site is halted at piling or raft stage there is the risk of flooding.
Similarly, if construction reaches the above-ground stage before it is stopped, structure floatation may occur, while structures that are midway-complete or complete can experience deterioration and problems with MEP installations.
Cost and Risk Control
To limit deterioration of construction sites, a number of legal problems must be addressed before construction is stopped, such as who bears the cost of: dewatering, maintaining temporary structures, protection from exposure and site security. And, even more crucially, who bears the risk of unstable structures and the potential failure of temporary structures.
Furthermore, when it comes to restarting works, it must be made clear who bears the cost and responsibility for: investigation and rectification works, or the consequences of inadequate rectification, building quality issues or issues of a latent defect manifesting at a later date, redesign due to change of use, the cost of reapplication for authority permits and implementation of new regulations.
MEP problems on stalled and restarted projects can also be costly; warranties must be extended for equipment, and equipment must be cleaned, inspected and tested. Existing electrical systems also require testing, and if plants have not been maintained, pumps and motors may seize. In the regional market, the firm anticipated that only the ‘ghost buildings’ that are commercially viable will be completed within the short term, i.e. those in prime locations. In the current economic climate it is unlikely that the redevelopment of many ghost buildings will achieve this.
However, Taylor Wessing concluded that significant physical deterioration is unlikely unless exposure to the elements persists for 15-20 years, adding that necessary remediation is reasonably straightforward. But, thorough due diligence is essential before embarking on resurrection of an incomplete structure, it said.
TAKING RESPONSIBILITY FOR COLLAPSED BUILDINGS
A contractor and architect are jointly liable on a strict-liability basis for 10 years from the date of delivery for the total or partial collapse of a building, according to Article 880 of the UAE Civil Code.
- In the context of "ghost buildings", the original contractor and architect may not be liable when the building (or any part thereof) is not complete. In these circumstances, the new contractor and architect will take the risk regarding the decennial liability because they will see the project through to completion.
- In situations where the original team has achieved sectional completion, the original contractor and designer will be strictly liable for 10 years in relation to the structural integrity of the building for those parts.
- Thereafter, the new team will also be strictly liable for the structural integrity of the building for 10 years from when the remaining works were delivered. If a structural defect arises which is caused by both teams, either team is strictly liable (or both).
- Depending on the circumstances, each team could then claim a contribution from each other and apportion liability (Articles 290-292).
- Article 880 cannot be contractually excluded.
