Forward-looking for the Construction Industry
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
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
- 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.
If you are being affected by Covid-19 or believe you may be and would like any advice or support to avoid or resolve a dispute, please contact our team of experts by using our contact form or calling our offices below: