With the construction industry starting to return to some normality, there are many questions relating to the impact of Covid-19 on employers, contractors and subcontractors within the industry.
With social distancing in place on construction sites, productivity has been hugely affected and many contractors have struggled to obtain the materials and supplies required for their construction works, causing delays and disruption to construction projects.
Here, ADR specialist Arbicon answers a number of questions to help those in the construction industry understand their rights.
1. Can I get an Extension of Time after suspending construction works on site due to Covid-19?
Under most contracts, yes you should be able to. You will need to check the contract that is being used, but generally under a JCT contract you can apply to the Employer for additional time if Covid-19 has caused delays on site that will affect your Completion Date. It is likely that the Extension of Time will be granted as a result of a neutral event, which means that although a Contractor can be awarded additional time, they will not be entitled to recover any additional costs incurred, unless by agreement.
The situation is different under an NEC contract where generally any additional time granted under a Compensation Event would give rise to both additional time and money.
Under both forms of contract it is important that the parties are made aware of the potential delays or disruption as soon as possible, ensuring the correct notices are issued under the contract, to give the Contractor the best chance possible of compensation.
The Contractor also has a responsibility of using his “best endeavours” to prevent further delay, therefore a good record of events and actions taken is crucial as they may be relied upon as proof further down the line.
2. Can I get an Extension of Time because my productivity is reduced on site from implementing social distancing measures?
You can apply for extra time due to disruption if working under the safety guidelines has reduced productivity on site. It is important to issue a second notice for this even if an Extension of Time has already been awarded for works being suspended for Covid-19. Adequate site records showing the difference between the planned and actual tasks undertaken on site will be required, showing how activities and labour levels were affected by the social distancing measures. Once again, the specifics of whether there is time and/or money entitlement depends on the type of contract in place.
3. Can I get an Extension of Time because my material deliveries were delayed due to Covid-19?
You can apply for additional time if you have documentary evidence that the delay was outside of your control and not due to your lack of action. The Contractor still has an obligation to prevent further delay, which means trying to source alternative products for quicker delivery.
4. Can I get additional costs from my Client because I had to use a more expensive Subcontractor as the company I had planned to use were isolating?
In most cases, a Contractor would take on the risk of the employment of Subcontractors, unless the Contract specifically stated otherwise. In which case, it is unlikely that you would be entitled to recover the additional cost, unless an agreement has been reached with the Client. You may be entitled to an Extension of Time however, to protect you from having liquidated and ascertained damages (LADs) levied if the supply disruption caused a delay to the contract Completion Date.
5. Can I get additional costs from my Client because the materials I had intended to use were not available, so I had to use a more expensive alternative?
In most cases, a Contractor would take on the risk of the supply of the materials, unless the Contract specifically stated otherwise. In which case, it is unlikely that you would be entitled to recover the additional cost, unless an agreement has been reached with the Client. You may be entitled to an Extension of Time however, to protect you from having LAD’s levied if the supply disruption caused a delay to the contract Completion Date.
6. How can I protect myself from incurring additional costs if there is a second wave of the virus and we have another lockdown?
You may want to open up discussions with your Client to include some kind of risk sharing agreement amending the Contract in the event of another lockdown scenario. This may include an understanding that any additional costs would be shared by both parties.
7. I am a Client and my Contractor refuses to continue working on site even using suggested guidelines stating that it is because of Covid-19. What can I do and what are my rights?
The Contractor has an obligation to use their “best endeavours” to prevent further delay, therefore would have to have a very strong argument to show that no work was safe on site. The Construction Leadership Council’s Site Operation Procedures lay out guidance for how safe working can be achieved, it would be a very specific site that could not utilise these procedures in some way. If a Client issued an instruction for the Contractor to return to site to continue works and the Contractor refused without a detailed and specific reason, the Contractor would be in repudiatory breach of the contract and action could be taken against them, including the employment of other Contractors to carry out the works, when the correct contractual procedures had been carried out.