Construction disputes and Coronavirus
Now that the industry has settled into a ‘new normal’ it may be that those involved in the construction industry are becoming increasingly concerned with the possibility of costly disputes arising as a result of virus-related issues, such as the restrictions on working, and supply of materials.
Ashtons Legal comments: “Although the government has fallen short of actually shutting down construction sites, many smaller firms have been concerned that the guidance on social distancing effectively means that they are unable to operate effectively. In addition, developers involved in housebuilding have also had to take into account the effective freezing the housing market and make adjustments to their business.
Indications are that construction companies are now starting to get back to work, but across the industry, there are concerns about how this will affect supply chains and the knock-on effect this will have on projects. This will inevitably lead to an increased risk of disputes in projects, but to avoid costly and expensive disputes we would recommend those involved in projects to engage early and try to agree how these issues will be dealt with moving forward.”
Organisations such as the Construction Leadership Council (CLC) have recognised the increased risk of disputes, and has called for more firms to sign up to a dispute-resolution charter drawn up by the Royal Institute of Chartered Surveyors (RICS), CLC chair Andy Mitchell stated: “The CLC fully endorses the Conflict Avoidance Pledge. Preventing the escalation of problems with the delivery of construction projects into disputes is in the best interests of the whole supply chain, and will save the industry significant time and money. The RICS Conflict Avoidance Pledge (CAP) was created in early 2018 to try to reduce the cost and severity of disputes in the construction sector.”
In a global study published in June last year, consultants Arcadis found that the UK construction sector compares favourably with other countries when it comes to avoiding litigation, but that a more collaborative approach could still play a big part in reducing costs. The study also found that UK construction disputes in 2018 took an average of 13 months to resolve. A failure to properly administer contracts was the number one cause of disputes, with a failure to understand or comply with contractual obligations a close second.
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