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Avoiding post-lockdown construction disputes

I always like to think good things come out of bad things.

One of the “good” things to develop in this current lockdown world of ours has to be innovation.

Businesses and individuals have had to innovate and adapt: we’ve seen vacuum cleaner manufacturers producing ventilators; parents becoming teachers; and many acquiring an enhanced aptitude for all things IT at a breath-taking pace.

Looking ahead to the end of lockdown

And that spirit of innovation is evident too in the construction industry, in particular when you consider the way the sector’s set to take a new approach to tackling contractual issues after lockdown eases north of the border.

In Scotland the majority of construction sites that are not involved with essential services have shut down in order to follow Scottish Government guidance. With the infection numbers finally going down, it follows that they’re now looking ahead to when sites can reopen, and on what terms.

It is unlikely to be business as usual.

English guidance for construction sites

If you have read the Construction Leadership Council-issued English guidance you will already have an inkling of what is likely ahead for us up here.

That guidance was issued in the middle of April to contractors in England in order to try and give some consistency to operating procedures on construction sites, whilst minimising the risk of infection.

It is not just a matter of keeping personnel two metres apart (although that is clearly a central theme in the guidance). It covers how staff get to work, parking, avoiding congestion at entrances and exits, considering maximum numbers operating at any one time, as well as the more obvious things you would expect to see like cleaning, use of canteens and toilets.

Interestingly, the guidance does not stipulate for any particular PPE. In fact, provided the two metre distancing rules can be maintained, the guidance indicates that PPE is not required.

The impact of complying with guidance

With many businesses having seen a halt in cashflow during the lockdown, looking at these measures — whilst positive in illustrating how sites can operate safely — will also raise concerns about the additional cost and time of completing projects.

Limiting the number of people who can work at one time for instance, or changing the way jobs are undertaken to meet social distancing requirements, sounds likely to be more expensive.

For projects suspended during the lockdown, with contracts that were not written with coronavirus in mind, questions will inevitably arise around contractual issues such as who bears the cost of the time and resources that implementing these measures will incur.

The potential for disagreement looms large.

Guidance on avoiding disputes

With concern that the revival of the construction industry may be impaired by lengthy and expensive legal disputes, the Construction Leadership Council has published a contractual best practice guidance, which the UK Government has approved.

The cornerstone of the guidance appears to be that all parties and stakeholders in construction projects should engage in collaborative discussions in an attempt to reach a fair outcome on a variety of issues that are likely to be affected by the current pandemic.

That may, on occasion, mean parties agreeing to a solution that does not strictly follow the contractual rights of the parties.

That’s innovation by any other name.

The guidance certainly gives some food for thought. It presents ideas for collaboration in a number of areas with the scope to cause contention. Areas like delay, suspension of work, additional costs and payment.

A recurring theme is the encouragement to think of extra contractual solutions. The prompt behind that appears to be to find ways that might be “fairer” in sharing the burden of the impact of current events.

If you are wondering why on earth you should take this approach, it also suggests the motivating factors: keeping work going; avoiding insolvency; and providing certainty.

Other bodies have replicated the spirit of this dispute avoidance message too.

A coalition of some major employers and professional bodies such as RICS, ICE and Network Rail has promoted a conflict avoidance pledge and produced a toolkit for parties. Again, the early identification of issues and the encouragement of collaborative working is a familiar theme.

What now?

Construction parties, like many other businesses, have a variety of challenges ahead when the lockdown is eased.

The promotion of early resolution of disputes and working together is laudable and sensible. Businesses and their advisers will be challenged to think innovatively to resolve issues arising as lockdown eases. Whether they can and will do so remains to be seen.

Karen Cameron

Karen is an experienced litigator and solicitor advocate who regularly appears in the courts throughout Scotland. She specialises in commercial disputes, giving advice and support to those involved in the construction and property sector in particular.

Posted, 15 May 2020 by Karen Cameron
Categories: Construction | Coronavirus | Coronavirus and construction | Insights | Litigation