New practice: Building contracts should be reviewed to take account of shortage of materials and other operational issues

Problems might include that materials cannot be obtained, materials may cost more than expected or suppliers may have to substitute materials of lesser quality, leading to delays, increased costs and consequent financial losses.

Other possible reasons for disputes, arising from a combination of COVID-19 and Brexit, include increased transport costs, labour shortages (including because of furlough and self-isolation) and loss of productivity because of social distancing at work.

The Construction Leadership Council (CLC) issued best practice guidance to the trade in May 2020 for firms in dispute over contractual obligations during the coronavirus crisis.

The guidance urges a collaborative approach to avoid disputes (ie that risk is shared between end-users, suppliers and contractors), and suggests possible contract clauses to achieve this. It notes that entitlement to extra time to finish a job is more likely to be acceptable to an end-user than taking on increased costs or bearing any financial losses caused by delay.

While some end-users are still open to a collaborative approach, others argue contractors should have reorganised their supply chains by now to minimise the risk of delays and unexpected extra costs and should therefore take responsibility for them.

Operative date

• Now

Recommendations

• Relevant businesses and individuals should review their contracts to ensure it is clear who assumes the above risks.
• Download the 19-page best practice guidance (pdf) from the CLC website.