With Brexit looming, what uncertainties should we be thinking about in the construction industry?

 

As the impending date of Brexit approaches, Britain’s construction sector continues to whither in anticipation of uncertainties tied to this unprecedented historical event. Below are a few things in particular firms should be worried about, but as in all volatile markets, we should be patient for this cautionary period to end, especially as plans for an exit strategy become more clear.

Earlier this year, our manufacturing sector saw a major surge in output as companies began to prepare for tighter restrictions on cross-border movement of workers and goods. It is safe to say that the surge is, for the most part, over and we are now all eagerly anticipating the next phase of the exit strategy. Prices for imported goods, including a massive amount of building materials, are likely to increase with new tariffs and taxes and will likely take longer to arrive as movement becomes more tightly controlled.

Additionally, it can be assumed that after the withdrawal from the EU, we can expect a major labor shortage. More than a quarter of all construction workers in London are EU migrants and if it’s harder for them to reach job sites, it’s very possible they won’t attempt to gain work here. The available labor that is left will consequently become more expensive, with projects facing extended timelines to completion.

Wary investors are pulling back as well, removing revenue streams from the industry that help feed the delivery of larger projects such as the HS2 (which our firm is assisting on). On the other side of this coin however, the government may be able to assist with more funding that would otherwise be spent on EU membership.

Whatever the future holds, we are confident the innovation and resiliency of the firms we serve will continue to help build a better future for all Britains, and we are very excited to walk alongside them through these uncertain times.

Michael Gallucci serves as the managing director and owner of MPGQS, a leading property and construction consultancy headquartered in London. Since 1996, Michael has built a reputation as a trusted partner for firms in need of his extensive expertise, great energy, and an unparalleled eye for detail. These strengths, in conjunction with his ability to build a team from the greatest talent in the industry, have paved the way for MPGQS to become a leader for handling large scale international projects.

MPGQS operates from offices around the UK, Europe, and the Middle East, and serves clients in areas relating to financial, commercial, contractual, and engineering aspects for large construction projects. From quantity surveying, project management, and dispute resolution, MPGQS works with clients on all levels of a project from inception to completion.
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Act now on heat network rules to avoid fines

ACT NOW ON HEAT NETWORK RULES TO AVOID FINES

Landlords and developers face unlimited fines because of a lack of awareness of the regulations covering heat networks.

There’s no denying that the regulations create an administrative headache for agents, and an unwelcome cost burden for landlords, but managing the process well could help reduce energy bills and develop more efficient buildings.

Nevertheless, it’s clear across the sector that many individuals and organisations have missed the deadline for notification and are perplexed by the requirements for metering, not helped by shifting deadlines creating a moving target.

Managing agents must ensure their clients comply by reporting information about properties where residents are supplied with heating, cooling or hot water. They may also be required to install meters at occupier level, an obligation that’s set to roll out more widely in 2017, spreading the net of those who can be caught out.

It’s complex but cannot be ignored. Non-compliance with any of the requirements to notify, meter and bill is a criminal offence that can lead to civil and criminal sanctions, including unlimited fines, not to mention damage to reputation.

MPG has been working with clients, providing consultancy advice on heating regulations, to:

  • advise them how they are affected
  • assist with the process of completing the statutory notification
  • prepare to install meters where necessary.

Driven by an EU target to cut greenhouse gas emissions from their 1990 levels by a fifth by 2020 and to raise standards in heat networks, it is hoped giving end users data should encourage them to reduce energy consumption.

Who’s affected?

Under the Heat Network (Metering and Billing) Regulations 2014, a heat supplier is any person or company who supplies and charges for heating, cooling or hot water, through either communal heating or a district heat network. Even a building owner or manager with a small sub-let is classed as a supplier if the tenant is charged for heating, cooling or hot water, whether it’s billed separately or included in the rent.

What’s the requirement for notification?

If you are a supplier of heat, cooling or hot water, you were required to notify the National Measurement and Regulation Office (NMRO) by the end of 2015. So if you haven’t already complied, it’s something that must be done urgently. It means completing either a single or multiple notification template, depending on how many properties you own or manage. That in turn means having accurate records of your heating scheme(s), including meters and consumption data. If bills are not based on accurate metering information, this is a criminal offence, which may result in conviction and potentially includes an unlimited fine, so it’s an opportunity to assess the equipment and systems you have in place.

Required information includes the estimated total, per calendar year, of the installed heating capacity, heat generated and heat supplied; the number and type of buildings supplied by that system; the number of final customers supplied by that system; and the number and type of meters or heat cost allocators installed in the buildings supplied.

NMRO can impose civil sanctions for non-compliance with the notification requirements, including compliance notices or enforcement undertakings and financial penalties.

It’s been reported that around 17,000 networks have gone through the process, but many more are at risk of penalties because they have yet to do so. Even for those that have complied, an updated notification must be submitted every four years.

Where must meters be installed?

In multi-occupancy buildings or developments with more than one building: Meters should already be in place at building level to measure heat, chill or hot water supplied from a district heating network or communal system.

For new buildings or where major renovation has been carried out: Meters must also be installed at the individual occupier level e.g. apartment. Where meters are installed, the heat supplier must ensure that final customer bills and billing information for heating, cooling and hot water is accurate, based on actual consumption, and compliant with the rules.

For existing buildings: The deadline for retrofitting meters at individual occupier level has been put back from December 2016 to late 2017 at the earliest. The cause of the delay is that the NMRO’s “heat metering viability tool” has been found wanting. This was the means by which landlords, agents and consultants were meant to identify where meters would be needed. Frustratingly, its withdrawal means notifications already done (and viability checked using the old software tool) will have to be re-checked with the new tool when it arrives.

Pending revision of the tool, the requirement to retrofit heat meters will not be enforced by the NMRO. It is expected that a public consultation will be held in summer 2017 with a view to releasing the revised tool late 2017, and a new deadline will then be released for retrofitting heat meters.

Where next?

You could face substantial fines if

  • you haven’t already completed the notification
  • you are involved in a new development or a major refurbishment and haven’t installed meters at occupier level
  • you haven’t installed meters at building level on all existing properties you manage or own

Owners, managers and agents of existing buildings could consider complying ahead of deadline by retrofitting meters at occupier level now. This will give you and your professional advisers more time to manage the process and to make arrangements to bill tenants individually, which will be a requirement and is another area where professional advice will be invaluable.

MPG provides help and consultancy advice on responding to the heating regulations and completing the notification process. We can also help you to identify how meter installation and data management could help you to improve building energy efficiency and reduce costs.

Clients whom we have advised on notification and boiler/MEP issues include Sloan Management, Regal Homes, Principia, Fifth Street Management, Westward Rose, HML Hathaways, Countrywide, Rendall & Ritner, Remus Management, JMW Barnard and Canary Wharf Group.

For more information or advice, please email Michael Gallucci michael.gallucci@mpgqs.com or call us on 0203 598 2506