Is the role of Principal Designer under The Building Safety Act covered by my professional indemnity insurance?

Duality of Role

In the consultation outcome document entitled “Building Control Regime for higher risk buildings and wider changes to the Building Regulations” (last dated 17 August 2023), the Government made it clear that its intention for the role of the Principal Designer under the CDM Regulations and the Building Regulations was to have a dual aspect. Paragraph 1.28 states that “the individuals and organisations procuring an undertaking for work to comply with the health & safety requirements of CDM are the same as those who should be considering compliance with building regulations”. It does not mandate the duality of roles. However, given the similarity in the CDM Regulations duty to plan, manage, monitor and coordinate health and safety in the pre-construction phase and the new duty to ensure that competent persons are engaged in their respective roles, and the duty to certify satisfaction with such compliance, it does somewhat follow that those previously qualified to carry out Principal Designer roles under CDM Regulations will be those best placed to do the same under the new building regulations. In terms of contract drafting, it is likely that most construction contracts and professional appointments will deal with the dual role in the same breath. For a further note on the allocation of risks in contracts generally, please see our article on the same.

Competence

Under the BRAE Regulations, there are serious sanctions for those carrying out the Principal Designer role if they are not deemed competent at the time of carrying out the services. These sanctions can constitute an unlimited fine and/or a custodial sentence of two years. The dual role is therefore not to be taken lightly; firms are well advised to resource wherever possible to meet the competence requirements.

Consultants should also note that under the domestic provisions of both the CDM Regulations and the BRAE Regulations (regulation 7 of CDM and 11C of BRAE respectively) anybody employed on a domestic contract may well find themselves in the role of Principal Designer automatically, without having actually explored the requirements with their client. There is therefore a broader scope for not only possible actions for damages but also regulatory sanctions, should consultants fail to meet the competence requirements in the BRAE Regulations.

Duties

The key duties under the BRAE Regulations are as follows:

Regulation 11J(2) states that the Principal Designer must ensure that any person carrying out any design work must take all reasonable steps to ensure the design work carried out by them is planned, managed and monitored so that the design is such that if the building work to which the design relates were built in accordance with that design the building work would be in compliance with all relevant requirement. Construction professionals should note that while the drafting does appear to require an outcome (and therefore could be construed as a performance guarantee, which presents coverage issues) the duty is moderated by the requirement to take all reasonable steps to ensure.

In addition to this requirement to plan, manage and monitor, there is also a requirement to take all reasonable steps to ensure that designers co-operate with the client etc. so as to achieve compliance.

Should a replacement Principal Designer be appointed, the replacement must review the work of the previous Principal Designer (as regards planning, managing and monitoring and co-ordinating) within 28 days after the end of the previous appointment and must hand over their own responsibilities in compliance with the legislation if replaced themselves.

This begs the question: How, given that the role of the Principal Designer is undertaken by consultants of varying different disciplines, can one professional consultant take responsibility for certifying the competence of another? It does not necessarily follow that a structural engineer can verify the work of an architect; or that a fire engineer may have the skills to verify the compliance of the architecture. Lawyers acting for professional consultants will always try to eliminate drafting in professional appointments which purports to create liability for the work of others. This provision appears to do precisely that.

In addition, as well as the requirements in the BRAE Regulations the Principal Designer must certify that compliance has been achieved, by way of a simple compliance statement, examples of which word the certification to the effect that the Principal Designer has managed the process for design as to achieve consensus that the co-ordinated design work complies with all relevant requirements. There is an additional declaration to be made at Practical Completion that the Principal Designer has fulfilled their requirements as Principal Designer. This is an uncomfortable proposition for a construction professional that typically reserves the extent of their responsibility to the duty to exercise reasonable skill and care in accordance with the normal standards of their profession, as per the market standard duty of care. Actually signing statements which underline that they have verified the work of others, however caveated, does appear to fly in the face of these professional indemnity principles. This could be problematic in particular for small to medium enterprise firms who do not necessarily have the capacity, capability or indeed competence to do so.

It is therefore highly advisable that any professional appointment for those undertaking Principal Designer duties does not go further in the wording than that which is written in statute. Bear in mind that more flagrant attempts to cap liability for this duty may result in the clause being invalidated – for an exploration of this topic please see our article on Drax v Wipro.

Which consultant?

An Health and Safety Executive report of June 2023 outlined the fact that only 18% of Royal Institute of British Architects (RIBA) members were undertaking CDM Regulations Principal Designer roles. Despite the fact that RIBA is now running a register of Principal Designers, and the obvious alignment of the role to architects undertaking Lead Designer or Lead Consultant duties, this prompts speculation as to whether architects will be similarly keen to swerve the responsibility for the BRAE Regulations Principal Designer duties, paving the way for other disciplines (such as quantity surveyors, project managers or structural engineers) to take a larger share of the new-look Principal Designer market.

The PI Position

Currently, commentary from underwriters states that there are no BSA-related exclusions, specific endorsements or clauses being written into professional indemnity policies. Claims are likely to be triggered by failure to obtain gateway approvals, failure to adhere to the golden thread requirements, competence queries and ever typical payment disputes. Professional indemnity cover may respond to a certain extent to cover the cost of regulatory investigations (under D&O cover) if the regulator decides to take punitive action but it is very unlikely to cover the cost of criminal proceedings. Please see our article on directors’ duties.

Summary

As with all professional indemnity coverage risks, it is vitally important for the insured professional to ensure that they not only meet the competence requirements under the BRAE and other regulations, but that they offer capacity to verify the work of others so as to provide the declarations required by the new legislation. Market leaders have already resourced up considerably in this regard; there is an urgent need to galvanise the knowledge and experience of the professionals insured under the policy to ensure that they can meet the new requirements. This is also a worthy endeavour for renewal time; the greater the resource and effort made within the organisation itself to meet the changing demands of the legislative framework, the greater the support within the market to back their business. Businesses are also advised, as ever, to ensure that their terms are checked when touting for work as a Principal Designer (or being appointed elsewhere, and for a Principal Designer to be verifying their work) so as to minimise coverage risks and to forecast any potential pitfalls. It is likely to take 2 to 3 years for the market to track the claims patterns and headline losses that will determine how the market responds to the new regulation. In the meantime, we will follow legal developments and keep you updated.

This article reflects the position as of 22 March 2024.