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Carillion and CDM Regulations - The Difficulties in Adopting a Project

Since construction giant Carillion filed for liquidation earlier this year the news has been filled with speculation over what will happen to ongoing projects. With recent news that companies like Robertson Group and Amey have taken over certain Carillion contracts, attention will turn to keeping existing services going, and beginning construction again.

Of course, there are a number of health and safety concerns involved in adopting any site part way through a project. Careful consideration needs to be undertaken to ensure compliance with health and safety law, including duties under the Construction (Design and Management) Regulations 2015 (CDM). Failure to do so can result in criminal prosecution, substantial fines, and custodial sentences.

Duties Under CDM

There are a number of defined roles under Part 2 and Part 3 of CDM. Each of these roles carry associated duties which are defined in law. For example, any person for whom a project is carried out (the Client) has a duty to ensure that the project is managed so that construction work is conducted so far as reasonably practicable without risk to health and safety. Importantly, this involves ensuring that sufficient time and resources are allocated to the project.

It is essential when adopting a project, especially one started by another contractor, that you ensure you are fulfilling all of your relevant duties under CDM and establish the current progress and risks of the site.

Consequences of Non-Compliance

Failure to comply with CDM is a criminal offence and so it is vital to ensure that duties are fulfilled. The reason for this is that the Health and Safety Sentencing Guidelines published in 2015 have resulted in a sharp increase in fines. These guidelines apply to CDM offences. Any company found in breach could be subject to an unlimited fine and directors or individuals could face a custodial sentence up to two years.

An illustration of the potential consequences can be found in a case involving working at height, where failure to comply with the CDM led to the prosecution of three companies after a worker fell 7 metres through a fragile roof:

  • Dengie Crops Ltd had contracted Ernest Doe & Sons (an agricultural machinery supplier) to carry out work, in this case replacing a fragile roof.
  • Ernest Doe did not have the necessary experience and subsequently sub-contracted work to Balsham (Buildings) Ltd.
  • Balsham then further subcontracted to Strong Clad Ltd.
  • Ernest Doe & Sons were ultimately found by the court to be unable to fulfil their role as Principal Contractor due to having no experience in construction.
  • Unnecessary subcontracting had caused a breakdown in communication and a lack of ownership over the project which had ultimately lead to the accident occurring.
  • For example, there was too much reliance on verbal briefings reminding workers of where netting was, rather than ensuring there was were appropriate safety measures for the whole roof (only 60% of the roof had safety netting below it).
  • Ernest Doe & Sons pleaded guilty to breaching Regulation 22 of CDM 2007 and were fined £360,000 and ordered to pay costs of £10,000.
  • Balsham (Buildings) Ltd pleaded guilty to breaching S4(1)(a) and 4(1)(c) of the Work at Height Regulations 2005 and were fined £45,000 and ordered to pay costs of £7,000.
  • Strong Clad Ltd pleaded guilty to breaching S4(1)(a) and 4(1)(c) Work at Height Regulations 2005 and were fined £7,000 and ordered to pay costs of £3,000.

CDM failings can lead to miscommunications, issues and accidents. Issues with site exchange will not automatically lead to prosecution, but minimising risk in this area is a necessary part of avoiding liability under the CDM.

Conclusions

Whilst it is commendable that others have stepped up to fill the void caused by Carillion's collapse the importance of maintaining high health and safety standards cannot be overstated. It is crucial with complex projects that the pitfalls above are avoided. If all duty holders ensure they  pay extra attention to project transfer, then health and safety standards can be preserved.

It is also worth noting that the responsibility to ensure compliance will not rest solely on Contractors. All duty holders will need to ensure they are making appropriate appointments and ensure clear and accurate information is conveyed to others to ensure that they too are compliant. Care should be taken to ensure that the desire to bring a site back into operation does not compromise effective communication.

If you have any queries or concerns with regard to corporate criminal liability, please contact a member of our Business Risk and Regulation team. In addition, our BRS platform offers tailored guidance across a broad range of regulatory content and our Business  Regulatory Consultancy team would be happy to assist you further.