As we start another new month in lockdown, major construction firms are making big announcements about reopening their sites and the industry is starting to see light at the end of the tunnel. There is a sense of unity to those of us working in construction, knowing that the country is looking to us to keep the wheels of our economy turning.
Equating to an approximate 6-7% of the GDP, the Government have been openly showing their support to the Construction Industry:
- The famous “Letter to the construction Industry” was issued on 31st March from MP, Alok Sharma, Secretary of State for Business, Energy & Industrial Strategy, acknowledging the critical contribution that the UK sector is making to support the UK economy, stating that construction sites could remain open but Site Operating Procedures (SOP) that have been developed should be adhered to.
- It was announced on 29th April that testing is now available for all those in the Construction Industry, showing symptoms of Covid-19.
- The Government is contacting those eligible for “Self-Employment Income Support Scheme (SEISS)” this week, which will mean direct cash grants of 80% of their profits, up to £2,500 per month, for those eligible, in a bid to protect businesses and individuals.
Sites that have remained open, working with social distancing measures in place, have seen a reduction in productivity and encountered difficulties securing materials after supply chains were affected by Covid-19. Although the Site Operational Procedures (SOP) published by the Construction Leadership Council are widely seen as a fair and reasonable approach to working, Contractors are having to find a balance between safety against productivity.
Delays caused by the pandemic will fall under the umbrella of a neutral event under most contracts, which will award additional time to contractors, but not the additional costs. A contractor also has an obligation under the contract to mitigate the delays caused and will by definition have to bear some of the cost to do so.
The Royal Institute of Chartered Surveyors has also stated that many projects are having to be refinanced due to the uncertainty of the current situation and contracts are being renegotiated to take into account the new rules that are being imposed on building sites.
We are continuing to provide current advice and reassurance to our clients, whether they are employers, contractors or subcontractors, on what their rights are and what action can be taken both now and once restrictions have been lifted, including:
- Assessment of delays and formation of Extension of Time documents
- Valuation of the effect of reduced productivity and supply chain problems
- Valuation of the additional costs incurred whilst trying to reduce the effect of delay
- Renegotiation of contracts with a view to collaboration and risk-sharing in the future, especially with the likelihood of a second wave of the virus likely to cause an additional disruption to construction projects.
- Tidy up existing contracts valuing accounts, Extensions of Time and Variations, in preparation for presentation to potential funders for refinancing of projects stalled by the virus.
- Contractual advice on potential risks for current and future projects which have been suspended or are operating under strict social distancing measures.