Insights Blog

The Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe, has announced that liability caps will be included in public works contracts and in the standard conditions of engagement for consultants, which are used across various types of public sector construction projects. As opposed to other standard form construction contracts such as RIAI or FIDIC, the public works contract is generally not open to negotiation by contractors, meaning contractors are restricted in managing their potential financial exposure under these forms of contract.

The liability caps have been implemented with a view to reducing barriers to delivering infrastructure and construction projects under the National Development Plan (which aims to invest €165 billion in infrastructure including transport, broadband and housing).

The amounts for the caps have not yet been decided and are currently under review by the Office of Government Procurement (OGP), which will publish updated forms of contracts and guidance for contracting authorities in deciding appropriate cap amounts. The updated standard conditions of engagement for consultants are expected to be published by the end of March 2023, with the updated forms of public works contracts to follow in early Q2. The usual exclusions to the caps will apply, including gross negligence, fraud or fraudulent misrepresentation.

The proposed caps follow an increasing trend towards the negotiation of liability caps in construction contracts across the private sector, and the updated contracts and guidance will no doubt be of great interest to all those engaged in construction projects across both the public and private sectors. Once the suite of standard form public contracts has been published, it remains to be seen whether the private sector will follow suit in introducing liability caps to standard form contracts such as the RIAI contracts.

Further detail is included in the Government press release here: Minister Donohoe introduces liability caps for those engaged in public works’ contracts