Navigating Regulatory Changes in Construction: A Corporate Approach

The construction industry is a dynamic sector that plays a crucial role in economic development and urbanisation. However, it is also susceptible to external influences, such as shifting government policies and planning regulations. Understanding how these factors interact is essential for our construction clients. This article considers the legal implications of government shifts on the construction industry, with a focus on how companies can navigate the complexities of changing regulations and achieve successful outcomes.

Planning regulations are the foundation upon which construction projects are built. They define the legal parameters within which companies must operate and understanding these regulations is not only a legal obligation, but also a strategic necessity. Shifts in government policy can often dramatically change these regulations, which can lead to increased risk for construction companies, whilst also creating new opportunities. Recent changes include the introduction of policies that prioritise things such as urbanisation and sustainability. As such, construction companies must ensure that they have the ability to adhere to these new policies whatever they may be.

One possibility to ensure that construction companies do not fall foul of new policies and regulations, is to ensure that they have a team dedicated to monitoring the political landscape, in order to predict and prepare for any upcoming variations that may impact on their business. Doing so would mean that the company could prepare for the new requirements in advance, minimising disruption within the company whilst ensuring that they will not be in breach of any new regulations. 

An example of something that may need to be adjusted following new government policy is the rationale behind company decision making. Those in leadership may need to consider the achievement of the new policies above other goals, in order to ensure that they are compliant. This could involve amending the company’s overall missions, it’s objectives and discussing how much risk they want to take on. If for example a government policy highlights the importance of sustainability, a company may need to think about becoming involved in more eco-friendly projects or investing in green technologies.

A further example is corporate restructuring. If the construction company is a group company, this may involve changing its organisational structure via mergers and acquisitions, or divestitures of non-core business entities that may be unable to adapt to the new government policies. One suggestion might be acquiring a smaller company that specialises in the production of renewable energy, in order to learn more about renewables and to be able to utilise this in line with upcoming environmental regulations.

It is becoming increasingly vital that companies are aware of the Environmental, Social and Governance framework (ESG) and how it might impact their business. As the government move to become more sustainable, they will likely favour companies who demonstrate their dedication to improving ESG. This means that construction companies should already be creating (or improving) their sustainability initiatives, such as actively reducing their carbon footprint or investing in green building materials. Doing so will not only ensure that they are complying with regulations, but it is also likely to make their business more attractive to prospective investors or buyers. 

A final example is in relation to deciding where capital should be utilised and invested. It might be that a company decides to change where their resources are being allocated following a new government policy. For instance, if a policy is introduced that prioritises affordable housing, a construction company who does not invest much into affordable housing may need to reconsider and shift its use of capital investment towards residential projects in areas that are underdeveloped. Alternatively, if the priority is infrastructure development, the company might turn to projects such as public transportation systems or bridges. 

In conclusion, construction companies must ensure that they take a multifaceted approach when considering new governmental policies and how to implement them into their business. Key factors that should be considered are strategy, risk management, ESG and the use of capital. Taking a proactive approach will mean that companies are able to stay ahead of the curve and will therefore mitigate their risk of non-compliance. Construction companies that do so are sure to thrive and continue to have successful outcomes despite upcoming changes in government policy and regulation.