Construction sector less adversarial than feared during pandemic

8th February 2021

Initial fears of a construction Armageddon during COVID-19 have been allayed in a recent report.

Blake Morgan Partner Dominic Jones has commented in an article in UK Construction Law regarding contractual disputes within the construction sector.

A recent report from property and construction consultants, Gleeds, states that the industry has been a lot less adversarial than first thought during the pandemic.

Dominic Jones said: “When COVID-19 first began disrupting construction projects around March 2020, there was widespread acknowledgment that the time and cost risks were often not dealt with well by standard form contracts. That raised the prospect of protracted disputes to address questions of liability – and there were many who feared a deluge.

“It is fair to say that no deluge has materialised yet, for a number of reasons,” he explained. “First, in large part due to the efforts of the Construction Leadership Council, we have seen a genuine increase in collaboration across the sector in response to the pandemic. That was reinforced, in the public sector at least, by policy guidance encouraging contracting authorities to offer suppliers time relief and cashflow support via contractual variations.

Contractors have also, in many cases, been able to mitigate the impacts of COVID-19 fairly successfully through uptake of new technologies and ways of working – which has, in turn, defused tensions and generated goodwill with clients.

“Against that backdrop, a common pragmatic solution has been to allow the contractor an extension of time for Covid-related disruption, but no additional payment. But there are signs that, on some projects, short term expediency will fall away as works reach completion and final accounts are submitted, bringing to the surface claims that had been put to one side,” he warned.

“We are also seeing the collaborative spirit being tested where there are disagreements over whether time and cost overruns arise from Covid or are in fact attributable to other causes (with different contractual consequences). Those issues are particularly difficult on high value projects where substantial sums are at stake.

“Looking ahead,” he continued, “the construction sector is primed to lead the UK’s economic recovery, with investments promised for large scale infrastructure, green energy and housing schemes. But that vision of the future may be precarious if Covid disputes proliferate and post-Brexit workforce shortages materialise.

“It remains to be seen whether the recent increase in collaboration reflects a lasting step change, or if there will be a return to (adversarial) type.”

The article was first published in UK Construction Law on 5 February. If you subscribe, you can read the article in full here.

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