Covid-19 seems likely to result in an extension of time being awarded to contractors.
But for contractors it is not as straightforward as simply checking whether “force majeure” is one of the grounds for an extension of time and, if so, an award will be forthcoming for the whole of the lockdown period.
Depending on the form of building contract and how hard it was negotiated, force majeure may not be a ground for an extension of time at all. If it is then the term may or may not be defined and may or may not expressly refer to pandemics.
Force majeure is not defined in the standard form RIAI suite of contracts.
However force majeure is typically held to be an event which is:
(i) beyond the control of a party;
(ii) could not have been reasonably avoided or foreseen nor
(iii) attributed to another party.
However, pandemics have happened before (swine flu and SARS) and so it could be arguable that a further pandemic was reasonably foreseeable and so should not be considered force majeure at all. If disputed this is ultimately a point to be decided upon by an adjudicator or the courts.
Most mid-market building contracts are bespoke (albeit based to a degree on the RIAI forms). These bespoke building contracts may contain detailed provisions defining an event of “force majeure”. In addition they may also require a contractor to comply with additional obligations before being entitled to claim an extension of time as a result of force majeure. Typical clauses may provide for the service of “early warning” or “delay” notices and may also specify information that the contractor must provide to the employer with such notices. Failure to comply with these provisions may weaken an entitlement to relief.
The building contract may also provide that the contractor is obliged to take steps to mitigate the effect of any delay. To this the general common law principle that an injured party cannot recover damages for loss to the extent that the loss could have been mitigated needs to be added.
Even if a contractor is unable to benefit from a force majeure ground to extend the completion date then other grounds (dependent upon the form of building contract) are likely to be available. For example where the Government exercises a statutory power which directly affects the execution of the works. Any restriction set out in Covid-19 legislation and/or guidelines may have the effect of limiting and curtailing progress thus giving a contractor an entitlement to claim an extension of time on this ground.
Change in Law
Contractors may seek to recover additional costs in completing works under a change in law clause in the building contract. These additional costs may arise as a result of complying with additional requirements to complete the works set out in Covid-19 legislation and/or guidelines.
Under Clause 4 of the RIAI suite of contracts contractors can claim additional costs where the cost of completing works is increased as a result of a change in law.
It is arguable that the change in law provisions in the RIAI suite of contracts does not extend to recommendations on work practices such as those contained in new Standard Operating Procedures published by the Construction Industry Federation (CIF) on 14 April 2020.
Since the Government announced the roadmap to the easing of Covid-19 restrictions two (2) new statutory instruments (the Health (Preservation and Protection and other Emergency Measures in the Public Interest) Act 2020 (Continuation of Part 2) Order 2020 and the Health Act 1947 (Section 31A – Temporary Restrictions) (Covid-19) (Amendment) (No. 2) Regulations 2020) have been passed. These are of general application and are not specific to the construction industry.
However if industry specific legislation is introduced (which may or could include recommendations contained within the CIF new Standard Operating Procedures) then this is likely to lead to contractors claiming additional costs under the change in law provisions in building contracts.
Resumption of Site Activities
Employers and contractors should be reviewing the CIF new Standard Operating Procedures with a view to implementing its recommendations to enable works re-commence on site.
In addition to the new Standard Operating Procedures the CIF has also published a Back to Work Resource Pack which complements the new Standard Operating Procedures and provides a final checklist before returning to work. The Back to Work Resource Pack recommends that:
- management teams are familiar with the new Standard Operating Procedures;
- a safety review is conducted for each site and put in place before work can restart;
- all relevant PPE is sourced and secured before work re-commences;
- a COVID-19 Compliance Officer is appointed and briefed;
- all workers undergo an online Covid-19 induction programme before entry is permitted to site;
- an initial team is sent to repurpose the site to meet the demands of the new Standard Operating Procedures;
- all sub-contractors are adopting the new Standard Operating Procedures;
- all workers are briefed on the requirements of the new Standard Operating Procedures;
- staggered lunch breaks for workers and staggered site entry and leaving times for workers;
- official permission to work is placed on the hoarding of the site;
- Covid-19 information posters are placed in prominent positions across the site; and
- local Gardaí are informed of the intention to re-commence work on site.
The Project Supervisor Construction Stage should prepare an updated Construction Phase Safety Plan together with a demobilization plan documenting the safety measures implemented and circumstances leading up to the site closure. The Project Supervisor Design Process should update the Preliminary Health and Safety Plan prepared for the works on the back of this updated Construction Phase Safety Plan.
One potential problem which may arise is in the role of the Project Supervisor Construction Stage itself. This role covers the management and coordinate health and safety matters on site during the construction stage and the Project Supervisor Construction Stage will therefore play a key role in ensuring that the relevant protocols are adhered to on site. However, where the contractor is also the Project Supervisor Construction Stage a potential conflict of interest arises. The contractor may have a vested interest in implementing measures which go beyond that which is necessary in order to ensure maximum recovery of costs.
Project insurances should be re-checked before works re-commences on site. Insurers should also be taken through the appropriate steps that have been taken to adhere to new Standard Operating Procedures and related protocols.
Where the project is third party funded employers should be engaging with any project monitors appointed by funders to advise them of the steps being taken by the contractor to adhere to new Standard Operating Procedures and related protocols.
Contractors should be asked to set out the status of any activities during the lockdown phase which did not require an on-site presence including (where applicable) any steps that have been taken to mitigate any delays.
Professional advice should always be taken before acting on any of the matters discussed. Please contact a member of our team should you wish to discuss this topic further.