Jay Balmer of Sintons explores what can be done to make the primary care estate fit for purpose

“The primary care estate is simply not fit for purpose, with many GP surgeries housed in inflexible, outdated buildings that cannot enable safe, high-quality care.”

That is a stark quote from Lord Darzi, author of the independent investigation into the state of the NHS.

And, while it may be a broad generalisation, the growth in demand for primary care marches on with renewed focus by the current government.

Investing in the primary care estate is essential to meet the growing demand for high-quality healthcare services and ensuring that all the relevant construction contracts, including building contracts, professional appointments, and collateral warranties, are robust and comprehensive is essential to protecting your practice

Whether or not your current premises are suitable, the passage of time and pressures of an ever-growing population will inevitably require investment in your premises.

This could involve:

• Alteration of existing premises
• Acquisition of an alternative site (whether through a purchase or lease)
• Development of newly-constructed buildings

Many partners or practitioners will be familiar with the legal process involved in a property transaction but the same might not be true when it comes to construction projects.

These include embarking on a redevelopment of your current premises as well as any transaction involving a property which has been altered or construction within the last 12 years, where consideration needs to be given as to the quality of works undertaken and the adequacy of the contracts for carrying out those works.

It is often the case that some construction defects do not become apparent until some time after the works have finished.

These can be caused by a number of factors, including a failure in workmanship or a failure to carry out design with reasonable skill and care.

A key issue is establishing a chain of liability between the construction team (primarily the designers and the main contractor) and the various stakeholders who may need to rely on the obligations contained in the various construction documents to have such defects rectified.

These stakeholders include:

• An ‘employer’ (the person procuring the building works)
• A purchaser
• A tenant
• A funder

The importance of ensuring each stakeholder, at whatever level in the chain, can rely on the underlying construction documents is often overlooked.

We would always advise that you negotiate a robust set of construction documents or check that the developer, landlord, or seller has put in place such documents as part of the due diligence on a newly built or altered property.

But what documents are we referring to?

The most-common documents are:

1. Building Contract: An appropriate building contract outlines the terms and conditions between an employer and the contractor. Depending on the type of building contract used, and how complex the project is, the terms of the contract may be administered by a construction professional known as a ‘Contract Administrator’, ‘Employer’s Agent’, or ‘Project Manager’, roles often undertaken by architects, quantity surveyors, or project managers.

Building contracts typically include:

• Scope of Work: Detailed description of the work to be performed
• Payment Terms: How and when payments will be made
• Timeframe: Project duration and deadlines
• Quality Standards: Specifications and standards to be met
• Insurance: What types of insurance are required to protect the works or cover potential claims against the contractor
• Warranties: The requirements to provide collateral warranties (which we have commented on below), both from the contractor and any of its designing sub-contractors

 

2. Professional Appointments: Professional appointments are contracts between the employer (or a contractor) and professional consultants who provide specialist advice in relation to the project. Their most-recognised roles include designing or managing the project. These documents should clearly define:

• Scope of Services: Detailed description of the services to be provided
• Fees: Payment terms and conditions, including any provisions to prevent fee escalation
• Responsibilities: Duties and obligations of the consultant
• Liability: Limits of liability and professional indemnity insurance requirements
• Warranties: As above, a requirement to provide collateral warranties

 

3. Collateral Warranties: Collateral warranties are agreements which create a direct contractual link between the parties to the underlying construction documents and third parties who, not being a party to those documents, may nevertheless need to enforce their terms.

Earlier, we referred to the example of defects becoming apparent after completion of the works. If you purchase or take a lease of a newly-built surgery from a developer and subsequently discover issues with the construction which need remedial work to be undertaken, the cost of that work would usually be unrecoverable from the developer or from a landlord if the lease assigns you the responsibility for the building maintenance

This is where collateral warranties become important – they are essentially a promise by the warrantor (such as a contractor or consultant) that the terms of the underlying construction contracts have been complied with.

As defects are, by their nature, a breach of contract, collateral warranties provide a route through which a beneficiary may be able to enforce the terms of the underlying contract and procure the rectification of defective work.

In addition to the primary obligation to warrant compliance with another contract, collateral warranties may also contain:

• Step-in rights: Such clauses provide the beneficiary with the right to ‘step in’ to the underlying construction contract to the exclusion of another party, such as an insolvent main contractor
• Liability and insurance: Limits of liability and separate insurance obligations
• Copyright: A separate copyright licence allowing the beneficiary to use designs and other documents produced by the warrantor

Investing in the primary care estate is essential to meet the growing demand for high-quality healthcare services and ensuring that all the relevant construction contracts, including building contracts, professional appointments, and collateral warranties, are robust and comprehensive is essential to protecting your practice.