17th April 2020

Coronavirus: Construction projects - where do we go now?

At the time of writing, the Construction Leadership Council (CLC) has just published the third version of its Site Operating Procedures (SOPs). These SOPs were issued to sit alongside the guidance published by Public Health England on social distancing in the workplace. It seems that the document was a tricky one to get right.

At the time of writing, the Construction Leadership Council (CLC) has just published the third version of its Site Operating Procedures (SOPs). These SOPs were issued to sit alongside the guidance published by Public Health England on social distancing in the workplace. It seems that the document was a tricky one to get right.

At the beginning of the crisis, a number of construction companies, particularly larger ones, made the decision to close their sites in order to protect the safety of their workforce. As time has gone by it would appear not everyone has followed suit. In fact, some companies who enforced a shutdown have now started to reopen sites, particularly as the guidelines for safe working have become clearer.

In the past week several of our contractor clients have indicated they have somewhere between two-thirds and three-quarters of their sites still running. Most of these sites are not running at full capacity - but nevertheless they are still moving forward. It seems clients and contractors, whilst complying with Government guidance, have shown a willingness to be flexible in order to keep projects going.

When things eventually get back to normal - whatever the new normal will be - a number of other challenges may present themselves. The parties will have to consider how to fully remobilize, but will also have to unravel and analyse what happened on their projects; who did what and what were the true causes. Parties already appear to be gearing themselves up for future discussions with the parties with whom they are in contract.

With this possibility in mind, it is sensible to prepare in advance. There are several practical measures parties to a contract can take in order to preserve or protect their contractual positions:

  • Make sure you comply with the requirements of your contract with regard to the serving of notices etc;
  • Demonstrate and record what delay mitigation measures are being implemented;
  • Keep full and regular records of progress, including labour records, material deliveries, and photographs;
  • Keep records of additional costs being incurred in order to keep a site open and safe;
  • Keep up an open and honest dialogue with the other contracting party;
  • Keep a record of all correspondence with sub-contractors and suppliers regarding the supply of resources;
  • Try to ensure that as much offsite work is taking place in preparation for when restrictions are lifted. This could include design, procurement and planning-related operations;
  • Liaise with funders, if applicable, to ensure the flow of funds will not be interrupted and none of the funding conditions are being breached; and
  • Prepare for fully reopening a site and remobilizing. Advise your employer client what steps will have to be taken and the likely additional costs.

Some of the contractual discussions which will take place once we emerge from the lockdown may be difficult as this is an unprecedented situation and some elements of construction contracts are going to be examined more fully than ever before. Main contractors will be in the most awkward position in having to negotiate both upstream with their employer clients and with their sub-contractors and suppliers, many of whom will be the ones who have suffered the most.

For example, an interesting problem could arise where a contractor has decided to unilaterally close a site for safety reasons relating to the COVID-19 outbreak. In this situation, under a JCT contract, it would probably be entitled to an extension of time under the force majeure clause, but not to any additional money. Whereas a sub-contractor, upon receiving an instruction from a contractor to leave site, would argue an entitlement to both an extension of time and loss and expense, as the instruction would constitute a relevant matter. It will be interesting to see how parties approach this situation.

Many parties involved in the construction process will have suffered financial losses, but the key is to allocate these losses fairly. In order to assist that process, early discussion and comprehensive evidence by way of records will be important.

For the time being, somewhat surprisingly, it could be argued that the construction industry, in trying to achieve a sensible and practical solution to continue working, is ahead of the rest of the country.

Please note: Nothing in this article constitutes legal advice and we are not liable for any reliance on the information provided. This is a rapidly changing subject, and whilst correct at the time of writing, circumstances may have changed since publication. Please refer to Gov.uk for up-to-date advice on the Government’s response to this issue.

To find out more about anything covered in the article, or to discuss the potential impact of the coronavirus pandemic on the construction industry, please contact Michael Chilton or another member of Thrings’ Construction team.


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