This page contains brief answers to construction faqs we have received in connection with the construction industry as a result of the Coronavirus lockdown.
What construction site precautions should be taken as a result of Covid-19?
All relevant Government guidance for workers during lockdown should be followed. The Government has encouraged use of the CLC’s (Construction Leadership Council) Site Operating Procedures (SOP), which follows Government and WHO guidance and sites can choose to adopt it within their own site procedures to mitigate Covid-19 risks.
The CLC published version 4 of the SOP on 19 May – the changes are minimal and the position remains the same on the 2m rule as mentioned above. The Government has also recently published its own guidance on safe working and the virus for construction. This has now been superceded by version 5 announced on 5 July, again with minimal changes.
Does our construction work have to cease if we cannot achieve 2m social distancing for all tasks?
As things stand currently under Government guidelines, the 2m rule must be followed where possible and safe. Under version 3 of the CLC’s SOP, site work does not have to stop if 2m separation cannot be achieved safely but if so, the importance of affected tasks needs to be considered and the hierarchy of controls used. Please now see version 5 of the SOP for an update on this.
If construction work is delayed by Covid-19 should extra time be awarded to the Contractor?
Taking a JCT DB 2016 as an example, if a Relevant Event delays the works an extension of time should be available, but remember, Contractors must apply for an extension of time and must mitigate the effects of a Relevant Event.
What about the extra costs incurred by Contractors due to Covid-19 related delays?
Taking a JCT DB 2016 as an example, loss and expense will be available where a Contractor incurs cost because the works have been materially affected by a Relevant Matter (as defined in the contract), but Covid-19 delays do not fall neatly into that bracket meaning only time and not money may be available.
Our Employer has told us we must stop work because we cannot achieve 2m distancing at all times, what is our position?
As mentioned above, neither Government guidelines or version 3 of the CLC SOP forbid work to continue if it is important and if 2m distancing cannot be achieved safely for that work to continue. If an Employer is overzealous in its exercise of social distancing measures in excess of current guidance, it may be possible for a Contractor to argue for extra time and/or money depending on the contract.
Will a Contractor be charged liquidated damages for Covid-19 delays?
Taking a JCT DB 2016 as an example, only where provided for in the contract and where a Relevant Event is not available and delays had caused a failure to achieve the planned completion date(s). The Employer must also follow the relevant contract procedure to claim or withhold those LADs.
Can a building contract be suspended and/or terminated due to Covid-19?
The standard JCT terms, as an example, allow for termination by either party if before PC the works are suspended by 2 months (or other stated period) due to a number of factors which could be argued to cover Covid-19 impact, depending on the circumstances.
What if one of the parties to a building contract becomes insolvent as a result of the current economic impact of Covid-19?
Under a JCT then the other party has the right to terminate. The obligation to carry out the works is also suspended from insolvency. Do keep abreast of any potential Government reliefs though.
How should contractual notices be served?
Carefully follow the contractual process and consider altered delivery timescales due to the virus.
What wider issues should employers consider when their construction project is delayed due to Covid-19?
Their position under other agreements/requirements relevant to the project, such as planning permissions/agreements, development agreements, agreements for lease or sale and/or funding arrangements. Consider target dates, final long stop dates and possible liquidated damages, plus possible lost rent or lost income due to delayed availability of the completed site.
What wider issues should Contractors consider when their construction project is delayed due to Covid-19?
- Impact on supply of materials and goods for the works
- Workforce issues, including sickness, furlough and self-isolation needs
- Difficulties in compiling, signing and completing contracts
- Impact down the contractual chain, on sub-contractors and suppliers
- Impact on projects that have been awarded and not yet commenced
- Impact on insurance and security availability
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