As we enter our twelfth week in the United Kingdom of extraordinary measures aimed at combating the spread of the Covid-19 virus, the oft repeated desire of so many seems to be the need for a return to normal. I doubt there is any individual in the UK that has not been affected by the Covid-19 virus and/or related measures to the extent that the rhythm of their past life has been disrupted – the ‘normal’ of life has gone and has been replaced with a fond reminiscences of what normal used to be like and how badly we want it back. It has been said that hope deferred makes the heart sick and many are feeling the impact of continually hoping that the next announcement by the government will bring us a step closer to normality, when in fact it often feels that what we are experiencing is just a different manifestation of the disrupted life we are in some cases growing to resent.
Even in our own construction industry, I hear so much talk of sites getting back to normal. What does that look like? I have to ask myself, what was so good about our pre-Covid-19 normal that drives us to want it back in all its apparent glory?
Not since September 1945 have world events been so life changing as to bring to a halt the normal of a nation. But maybe the nature of the Covid-19 impact is such that its occurrence although bringing so much tragic loss of life, can be harnessed in order to assist us in re-evaluating the lives we lead and the manner in which we carry out our day to day business – even in the construction industry. Never in my lifetime has there been a situation where the industry that I have been employed in has largely been brought to a halt. So often I have considered how the construction industry might benefit from major changes to the manner in which we do business, but the reality seems to be that life moves too quickly – if only someone could stop the roundabout so we could take a minute… Well, for me, Covid-19 was a roundabout stopper. The question now is, are we content for it to start again and return to our old ways – the normal of the construction industry – or are there ways that we can immediately show that we are prepared to change?
Here’s a tale of normal revisited.
Contractor A is working on a social housing project which commenced late 2019. The works were procured using a JCT D&B 2016 form unamended (I know…I’ve just strayed away from reality but bare with me). Covid-19 rears its ugly head. Lockdown is brought into force. The works on site are suspended as tradesmen are unable to continue with the work, due to an inability to under take works in keeping with the guidelines issued by the Construction Leadership Council. Contractor A notifies Employer B of events and pursuant to clause 2.24 indicates that these events have and will delay the progress of the Works. Contractor A cites clause 2.26.14 (force majeure) as the appropriate Relevant Event. Employer B acknowledges receipt of the notice and asks that further particulars of the impact of the delay are provided. Contractor A responds with further particulars whilst identifying that the impact is ongoing and the ultimate affect of Covid-19 is yet to be finally established.
Upon receipt of the further particulars, things get back to normal!
So here are two possible normals.
The old normal
Upon receipt of the further particulars Employer B does not immediately give an extension of time. He awaits further details which were alluded to by Contractor A. These details are eventually provided – its now December 2020 – some 9 months since lockdown started. The Works were due to be completed in October but are still ongoing. Employer B acknowledges receipt of the further particulars…and waits for a further 12 weeks before informing Contractor A that his decision is that only half of the time now claimed by Contractor A was incurred as a result of Covid-19. He grants the reduced extension of time, notes that Contractor A has failed to finish by the revised date and gives notice that he will be deducting liquidated damages. Contractor A disagrees, but in the short to medium term not only has to finance the additional costs associated with running late because of Covid-19 and costs associated with measures taken to ensure works could eventually proceed, it now has to accept non-payment in the shape of the liquidated damages. Adjudication…arbitration…the courts…solicitors…claims consultants…barristers…you know the rest of the story. Unfortunately, some of the characters in my story of the old normal – people who yearned for the return to normal will cease to trade.
The new normal
Even before receiving the first tranche of further particulars, Employer B recognises the difficulties that Contractor A now has and also realises that having his Contractor in difficulty will ultimately cost him money. Employer B and Contractor A agree to meet and both agree that force majeure is the Relevant Event and they need to agree the impact sooner rather then later – better the certainty of misery than the misery of uncertainty.
Together, Contractor A and Employer B (Employer B supported by his Employers Agent C), assess and agree the progress of the Works as at lockdown. It is noted that there was already some delay. Contractor A claims that even this is due to Covid-19 but Employer B disagrees. They agree to separate pre-existing delays out and return to them at a later date (or on a good day agree responsibility for those delays). Together they calculate the period of complete standstill and agree that this period should be used to revise the Date for Completion of the Works. An extension of time is immediately issued revising the Date for Completion.
They then consider how progress will be affected as the Works progress under a new regime of maintaining social distancing and maintaining the best welfare of the operatives in site. Each trade is considered and the measures that are likely to cause delay are identified. Works recommence, progress is measured and reviewed on a monthly basis and the results compared with the initial consideration of delay. Each month a period of delay attributable to this is established. This does not always result in all delay periods being attributable to Covid-19 but one of the advantageous side effects of the progress monitoring is that it has become clearer why other delays are being incurred.
When the revised Date for Completion comes, assuming that completion has not occurred by then, the periods attributable to Covid-19 are then added to the initial extension of time. If there is no agreement on the other delaying matters, then this is left open for further particularisation, discussion and ultimately agreement between the Parties. Yes, even with the new normal I am not that naïve as to believe that there will be no arguments. However, under the new normal I am hopeful that Employers and Contractors will develop relationships based on mutual respect and trust for each other, that will result in a end to our story where both our heroes live to enjoy the fruits of their labour.
If you think that this is something that you as Employers, Contractors or Subcontractors would like to explore, but consider that some form of third party facilitation may be advantageous in ensuring a happy ending, then we would be more than happy to speak with you and consider how we might assist.