Throughout the Covid-19 Pandemic, the Construction Leadership Council (CLC) has provided useful support and guidance to the construction industry on responsible and fair behaviour in contractual arrangements and advice on ensuring Covid-safe working practices.
On 11 January 2021, the CLC published a paper entitled “Covid-19 Claims and Disputes in Construction”, which was a report compiled following questionnaires to and interviews with a number of organisations involved in construction claims. The aim of the research was to obtain a clearer understanding of the impact of Covid-19 on construction contracts and the possible nature and volume of potential future claims.
The highlights of the CLC paper include:
- That there have been an increased number of notifications and claims under ongoing construction projects.
- That an increasing number of claims are being rejected. Claims requesting extra time for completion seem to be receiving more positive treatment than financial claims.
- That the commercial behaviour of contracting parties is changing. In the short-term aftermath of the arrival of the Covid-19 Pandemic, there was increased collaboration between contracting parties, especially amongst public sector clients and Tier 1 contractors. However, as time has gone on, there have been increasing examples of behaviour hardening throughout the supply chain. Evidence of this has included more proactive contract management; increased tender lists; sub-economic pricing; an increase in the rate of insolvencies; and robust discussions on risk allocation in respect of new projects.
The CLC paper therefore anticipates an increase in disputes, particularly as those projects whose execution has been affected by the pandemic begin to reach final account stage. The CLC’s expectation is that all tiers of the construction supply chain are likely to be affected and that firms both large and small will be impacted as the effects of the pandemic flow out into final accounts.
Despite all the doom and gloom, the CLC paper concludes with a request that the industry works together to support the long-term health of the construction sector by constructively resolving all contractual disputes arising from the pandemic. It remains to be seen whether the sector will heed that request, but if you would need any advice on issues surrounding the Covid-19 Pandemic and construction projects, please contact Ian Seeley or James King.