Brexit – and the knock on effect to the Irish Construction Industry

After many months of twists and turns in the Brexit negotiations, the UK is now set to leave the EU on the 31st January 2020. UK MP’s voted in favour of the Withdrawal Agreement Bill on the 9^th January 2020 and the next steps now is a vote in the House of Lords and then ratification by the European Parliament in late January. After the 31^st January there will be a 11-month transition period to allow the UK and EU to negotiate their future relationship and a trade partnership. If the UK does not extend the transition period and fails to agree a trade deal by the 31^st December 2020 then existing relations between the UK and EU will cease and Britain will leave without a deal.

Leaving without a deal means the UK would immediately exit the customs union and single market which could lead to serious disruptions to trade and supply chain movements between the Ireland and the UK.

Main Impact – CE-marked construction products

One of the main impacts will be in relation to CE-marked construction products. The Construction Products Regulation requires all products used on projects in the EU to have a CE mark from an EU registered certifying company called a ‘notified body’. These companies check the goods are suitable for use and provide ‘certificates of conformity’ and permit the use of the CE stamp.

In a no-deal Brexit, UK based certifying companies will no longer be able to certify the goods and apply the CE mark as they will not be part of the EU and the products cannot be used on construction projects in Ireland. This will have far reaching implications on projects with the need to procure alternative products from mainland Europe which will result in cost increases and delays due to lead in times and longer delivery times.

In the short to medium term, it is expected that certificates currently issued will remain valid, in line with the normal terms of their validity.  This will ensure that products currently certified and in use on any given project, should continue to be accepted, once the completion date for the project falls prior to the expiry of said certificate.  Should a product certificate expire before PC, then a new certificate, from an appropriately certified notified body must be obtained.  This will assist in mitigating against potential ‘shocks’ to the industry whereby products may be rendered unacceptable, causing fluctuations to prices arising from the resulting supply chain issues.  It will also assist in allowing manufacturers a period of grace to have appropriate certification in place now that much of the uncertainty of Brexit actually occurring has been removed.

Checklist to help you prepare:

While there is no certainty in relation to the impact of Brexit, it is imperative to guard against the disruption and ensure you are best placed to tackle the challenges it may have on construction projects. We have prepared a checklist of possible actions that we recommend should be taken:

• Develop a Brexit risk register which identifies all risks with appropriate mitigation measures which is updated on a regular basis with input from the full project team.
• Develop a Brexit procurement schedule to highlight all products and materials being procured from UK suppliers and identify products requiring CE Mark certification.
• Liaise with all suppliers and subcontractors to identify the impact in terms of custom or tariff costs and delivery delays.
• All products and materials that are procured in the UK should be purchased in advance of Brexit.
• Identify alternative suppliers/materials based in Ireland and mainland Europe.
• If there is no alternative, engage with UK suppliers to ensure they arrange for the transfer of ‘certificates of conformity’ from the UK ‘notified body’ to an EU-27 ‘notified body’ before 31st January 2020.
• Identify logistic routes for importing materials from mainland Europe which avoids UK ports.
• Undertake financial modelling to identify the potential cost implications and put in place a Brexit contingency fund.
• Check the validity of product certs which generally range from 2-5 years and compare this with the project programme to determine the Practical Completion date during procurement.
• If a certificate expires before Practical Completion for a product that has been used on site, engage with the manufacturer to determine their timelines for providing acceptable certification.
• Establish a programme contingency to deal with potential delays that might be incurred.

If you would like discuss any of the above further or want assistance preparing your project for Brexit then please feel free to get in touch with us.

Author: Michael Gallagher