Be concerned for all project participants
- Ensuring everyone's health and safety is paramount.
- Familiarise yourself thoroughly with the latest health and safety and employment law position, including how resuming work affects entitlements under wage support schemes. Laws local to your project sites and those specified in your agreements may be relevant.
- Assess the practicalities of measures such as physical distancing and hand hygiene when working and taking breaks. Continuing with projects once they have restarted requires adequate sanitiser and personal protective equipment supplies, yet manufacturing and distribution are strained and stocks could suddenly deplete. How can your employees travel to work safely? What site practices and other obstacles worry them? Would rotas and rescheduling keep projects going, albeit with reduced numbers?
- Governments, authorities and industry bodies are issuing guidelines encouraging the construction industry to act fairly and responsibly, respect laws and regulations, and protect jobs and the economy.
- You must balance this broader guidance against sticking to your contractual rights and obligations. Other parties or your workers may rely on guidance to adopt a level of vigilance that differs from yours. As guidance is often inconsistent, evolving and non-binding, how will your actions ultimately be viewed? The answer depends on each case's facts, contract and jurisdiction. For example, a contractor might rightly seek assurances or instructions from its employer to clarify the approach towards guidance before returning to site, but will also want such caution not to be seen as a breach of its duty to mitigate project delay.
Collaborate early and widely
- All sides of the industry fear insolvency and mothballed projects. No-one will find a quick or perfect solution, but staying in the trenches makes things worse. To see more of the whole picture, urge supply chain members to report their situations openly and frankly. Communicate often and seek updates.
- What channels do you have for contacting policy makers to express the need for improved laws and regulations or government relief?
- To help you deploy limited or stretched resources efficiently, ask:
- What is the risk profile on your projects, given remaining float and the current state of progress, and how might competing delay causes affect you?
- What equipment and materials have been or must be ordered, by when and from where? Are there delays or cancellations? Do alternative providers exist? What are the contractual implications of sourcing from third parties?
- How will your commercial interests shape your priorities?
- How does the programme need revising?
- In your discussions and decision making, reflect on how your proposed actions might be perceived by those with direct and indirect interests in the project, among the public, on social media and in the press. The nature of COVID-19 and people's responses to it mean one tweet can wipe out reputations, brands and share prices more easily than before.
Understand how contracts may operate differently
- Beware of waiving rights, but also use entitlements in light of your discussions with other parties. What incentives could persuade them to treat your obligations more flexibly, if necessary?
- Working safely will be disruptive, making contractors and suppliers less efficient and pushing up costs and/or causing delay. How will parties decide whether it's worth restarting or continuing once they've restarted? Some remobilisation work is essential and the fair approach recommended by (but, crucially, not underwritten by) governments suggests parties cannot be expected to bankrupt themselves, but if force majeure-type remedies are no longer available, parties will need to manage insolvency risk together if the job is to be completed.
- Think creatively and constructively:
- Might there be a claim for disruption as well as, or instead of, an extension of time?
- Could you take smaller steps to protect your position without derailing the project or increasing the likelihood of disputes? For example, depending on the wording of your retention of title provisions, employers should incorporate materials into the project speedily and suppliers should identify and label their goods clearly.
- Check clauses closely to work out the implications for your project. For example, complying with COVID-19 legislation may have different consequences from following government guidance on physical distancing. Does compliance bring relief for a change in law or an employer's act of prevention? Parties might try to say time is at large, such that works can be completed in a reasonable time, but if these are weak arguments, judges, adjudicators and arbitrators may frown on them later.
- Can you share risks with your counterparties to make project completion more likely, perhaps by renegotiating contracts or updating payment schedules and programmes to establish a new baseline?
- When renegotiating or agreeing new contracts, remember delays or hindrances caused by the pandemic are now foreseeable. Could you suggest or accept drafting which anticipates COVID-19 and its return in other forms but still allows recovery?
- The new landscape generates questions never contemplated in negotiations before. For example, if contractors are in a scheme paying reduced salaries, could employers argue the contract price should decrease accordingly?
- Maintain and secure appropriately detailed records. Log notices, claims, instructions, programme updates and correspondence. Ask those with more time in your legal division to prepare templates to help with this exercise and so you're equipped for the volume of paperwork ahead. Remind your accounts department that late or incorrect payment notices can significantly disrupt cash flow in jurisdictions with mandatory prompt payment regimes. Ensure parties sign contract variations, settlements and meeting notes containing important decisions. Consider allocating staff to audit current projects for poor record keeping and update documents which have fallen behind.
Authored by Angus Rankin, Mark Crossley, and Victoria Tang.