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Challenges in construction brought on by Covid-19

Today's circumstances in construction are challenging, to say the least. Perhaps you are just about to start work? Perhaps you are already part way through? Either way, you will be wondering what is going to happen.

The first thing to do is to speak with your contractor; he is probably worrying as much as you. His concerns will include wondering if you will still wish to proceed with the work when the quarantines, self-isolations and lockdowns are all over. He will also be concerned about his obligations to you and your approach towards his inability to progress as contracted.

The key is to remember neither party was at fault and both parties are going to be adversely affected. There inevitably will be pain, but sharing this pain will make it possible to work together. It is important to know your rights and obligations and then to put them to one side because your construction contract never had in mind the impact of the coronavirus, Covid-19.

It is very likely that, simply to survive during the period of isolation and business close-down, both parties will have expended some of the money they need for the project. It is therefore possible that either the contractor will no longer have the cash to run for a month between payments, or the owner may not have the funds to pay for the work promptly.

The need is for dialogue because when all of this is over, you will both need each other — the contractor will need work to keep his business afloat and the owner will need a completed house.

The problems to be considered could be wide-ranging. They may include increased costs to the contractor from subcontractors, suppliers, shippers or their own workforce. They may not be able to purchase certain materials because the manufacturer has gone out of business, perhaps taking the deposit with them. You need to be assured that the funds you pass to him will be used on your job.

These matters will change your contractual relationship and they need to be handled fairly and sensitively if the parties are not to fall out. Many matters could result in unexpected but fair and justifiable increases in cost, and you may need independent guidance in determining if it is indeed a fair increase, especially with the backdrop of stress and anguish on both sides.

The path to a solution lies in communication that leads to a fair and equitable compromise to allow both parties to confidently continue to a successful, if late, completion. We recommend you start this process early so that precipitative and unwelcome actions are avoided.

In the event that you need expert advice, it will be wise for that advice to be completely independent so that both parties can feel they are being heard.

You are in risky territory, and essential and unavoidable revisions to your construction contract should be clearly and formally laid out so that both parties have greater certainty and are able to focus on moving forward to successfully completing the project.

Ian Feathers is a founding partner of Bermuda Project Managers Limited. For more information, go to www.bpml.com or e-mail info@bpml.com

Ian Feathers is a founding partner of Bermuda Project Managers Limited

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Published April 14, 2020 at 9:00 am (Updated April 14, 2020 at 8:25 am)

Challenges in construction brought on by Covid-19

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