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Manage retrofitting risk

Retrofitting specifically refers to the fitting of climate adaption measures to existing premises, and it is often carried out as part of a wider refurbishment project.

We anticipate an increase in both retrofit and refurbishment projects as the sector continues to back the green agenda. It is important to recognisethat such projects share a greater risk profile than an equivalent new-build project, and it is equally important to manage that risk appropriately.

The condition of existing structures and building systems will have a significant impact on the design, price and programme of projects. Where services are upgraded, but the building’s structure is not being stripped out, many risks can lie undetected until refit commences and the opportunity for the contractor to manage these risks within a fixed price can be severely impaired. Detailed condition surveys will certainly help, and should be undertaken as a prerequisite, but undertaking intrusive surveys can often be difficult. Owners may need to take a more flexible approach to transferring cost and programme risk in relation to existing structures where incomplete information is available. A contractor may need to be engaged in two phases, the first being investigative, before a fixed price and programme can be secured for the second phase works.

Design integrity

This is a critical issue when dealing with building services, particularly so when the works involve connections to existing legacy systems, as many retrofit projects do. Owners will generally want to ensure that one contractor or designer is responsible for the integrity of the design.  This will help to ensure that energy efficiencies are maximised and accountability for defects is clear.  Notwithstanding the more flexible approach to cost and programme risk advocated above, owners will still have to pass on the long term design and workmanship liability to designers and contractors.

Retrofit projects are often undertaken in occupied premises. Indeed, the timing of a retrofit in an asset like a shopping centre is paramount - the asset may never recover if under-investment drives vacancy levels to increase beyond a tipping point. Undertaking works in such an environment presents a series of challenges. The phasing of works should be carefully planned to take into account peak demands on the property and disruption needs to be minimised. Both need to be managed contractually while occupiers must also be managed. Tenants will inevitably underestimate the disruption likely to be caused and there is an inherent danger of scope creep where end users think they can act as client. 

There are lots of risks in carrying out a retrofit project, which is why it is vital owners plan carefully before taking the next step, to avoid hidden pitfalls and extra costs.

Ed Cooke is a partner in the construction and engineering group at DLA Piper UK LLP

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