I think it’s fair to say that our generation hasn’t experienced anything like this before. As an experienced construction lawyer, I’m seeing first-hand the way the industry is being affected by this unprecedented situation.
Social distancing and the construction industry
While in some ways the economic and societal impacts of the coronavirus is comparable with a recession, social distancing has added an extra layer of complexity to the construction sector – although the fact that the industry is still allowed to operate at all is a much-needed lifeline.
The new social distancing rules have affected some sites more than others, depending on the work being carried out. In the medium to long term it has also meant that it is - and will be - more difficult to get development projects off the ground.
Construction contracts and COVID-19
Construction contracts are already intended to be very robust in dealing with events on-site that are seen as unlikely risks or outside of the control of the parties when entering into the contract.
But COVID-19 means it’s likely that a few tweaks will be needed to the wording of future contracts to make sure that both parties can be certain of the time and cost implications for them should something like this ever happen again.
At the moment we’re very busy advising our clients on their responses to COVID-19 in relation to ongoing construction projects and, in particular, what immediate steps they should take under their building contracts.
Building contracts generally contain a number of clauses that deal with what happens if all sorts of risks and events take place. Some of these are very general and could apply to a number of situations, including pandemics like this; others are more specific.
The most common contracts are the JCT and NEC standard forms. While they have common themes, each also deals with this situation differently. And there are very different considerations depending on whether you are the contractor or employer. Not taking the appropriate step under your contract could be very expensive. But in the background, our clients have significant practical and commercial challenges to weigh up as well.
Legal advice for the construction sector
Longer-term, our clients are looking for advice on how their contracts and procedures need to be changed in case this happens again.
There has been an immediate need to ensure that any ongoing work can be carried out in accordance with health and safety and the new social distancing rules.
We’re also encouraging clients to check their contract to see how it deals with this situation. Usually, while there might be no specific mention of a pandemic, there will be clauses that apply. Our advice is usually not to do anything hasty - whether you’re an employer or contractor. If you do, it might prove very costly in the long run!
At a time like this, our role is to support our clients generally and ensure that they know where they stand when they make important decisions. We also appreciate that, while there may be legal considerations here, there will also be practical and commercial ones.
With this situation, there is also a very important human element as well which comes into play. Often discussions are very much about how both parties can ensure that whatever construction project they are working on remains viable either on an ongoing basis or in the future whilst keeping everyone safe.
The spread of the coronavirus may provide the sector with its largest challenge in decades, and Hugh James is certainly playing its part in helping our clients to get through this difficult period through effective contingency planning and sound advice.
About the Author
Ioan Prydderch is a Partner and Head of the Hugh James Construction, Energy and Projects team across the firm’s offices in Cardiff and London.
His role involves advising the firm’s key clients on some of the most significant construction projects and disputes in Wales and the wider UK. Ioan and his team act for a wide range of clients, ranging from government and public authorities to banks, developers and contractors.