Kenya construction industry outlook

The National Construction Authority (NCA) has published a new set of regulations intended to protect building owners from fraudulent building service providers.

NCA’s Defect Liability Regulations 2020 introduces a provision to safeguard commercial building owners from concealed structural flaws in a commercial building or fixed installations that may not be detectable during the ordinary patent defect liability period included in contracts.

According to the regulation, every contract for the construction of a commercial building shall prescribe a latent defects liability period shall be a minimum period of six years from completion of the patent defects liability period.

In the regulations, NCA has also extended the patent defect liability period from six to 12-months. This gives owners at least 7-years to recall contractors for faulty works.

It adds that a contractor shall be liable for the rectification of patent defects that become apparent during the latent defects liability period while building professionals are also required to obtain a professional indemnity cover for latent defects that may become apparent during the period.

The regulation has a cost effect on contractors since it requires them to obtain insurance cover for latent defects that may become apparent during the latent defects liability period.

The new regulations also require all owners of commercial buildings to have building insurance at all times to cover structural damages attributable to the owner.

Construction industry players have responded negatively to the new laws saying it is bad for business since it will increase costs for both parties.

The Institute of Construction Project Managers in Kenya chairman Tom Oketch told Business Daily that the new regulations undermined the role of architects as supervisors during the implementation of projects and was bad for business.

He said extending the patent defect liability period from 6 to 12 months will negatively affect cash flows for contractors since contractors will require more funds to facilitate their future operations as most of their income will be withheld to cushion property owners of any eventuality.

Other Kenyans outside the construction industry, however, are of a different opinion. Gilbert Josiah Mungu, a lawyer in Construction Law and Arbitration, told the Standard that the law should be extended to cover all construction contracts except for owner-occupiers.

“The idea that the regulation only applies to commercial buildings does not seem to be informed by commercial necessity geared towards reviving the construction industry and the application of National Construction Act, 2011,” he said

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