We are currently receiving a large volume of enquiries in relation to the impact the Coronavirus is having on construction projects.
One of the key issues relates to whether there is an entitlement to an extension of time to the completion date and or the recovery of loss and expense.
A construction contract would usually expressly state that a Contractor can claim for an extension of time (EOT) to the period for completion of the works where they are delayed for reasons outside the Contractor’s control. If the construction contract does not expressly state it then it can cause other issues which are outside the scope of this blog. However, the key point is that there is no statutory or common law entitlement to an EOT. As a result, a Contractor is exclusively tied to its individual contractual provisions on this issue. The standard forms contracts commonly used across the industry however, do provide for an EOT on specific grounds e.g. acts of prevention by the Employer, Government exercise of statutory powers and force majeure events.
Essentially, a Contractor will need to request an EOT in order to limit its liability to pay damages under the contract for a failure to complete the works on time. In turn, an amount of time is granted after what would have been the original completion date for the Contractor to finish the construction work. The EOT will align the Contractor’s liability for liquidated damages with the new ‘extended’ completion date. Depending on the event which caused the delay, a Contractor may also be entitled to recover its loss and expense incurred as a result of the delay to completion.
It is now fairly inevitable that COVID-19 and the Government’s approach to dealing with it has already caused or will cause significant delay and disruption to the construction industry. However, the actual impact is still unclear because it will depend on the contract terms, the project, the site, the works being carried out and whether they can be carried out within the Government’s guidelines. It is worth noting that some sites have been closed down whilst many others are continuing.
If you are a contractor or sub-contractor working on construction sites there are a number of steps that you should be taking if you are delayed as a result of COVID-19:
- Consider the terms of your individual contracts and follow the process for the issuing of notices and submitting an EOT claim precisely;
- Reflect on any loss and expenses provisions in your contract arising from the delay and whether they might apply;
- Communicate with your Employer and notify the delay in line with the timescales in the contract;
- Keep up to date records and evidence of site attendances, materials orders and deliveries, staff sickness/absences, sub-contract notices and attendances, any additional costs being incurred including site security, hire charges etc.; and
- Ensure that if the site is shutdown, adequate health, safety and security provision has been allowed for.
Further information
Should you require any further information you can contact a member of our dedicated Construction team on 01619414000 or at lawyers@myerson.co.uk