In the construction sector solid cash flow throughout the supply chain is the lifeblood of most projects, no matter what size, and is arguably the single most important factor in ensuring that a project reaches its conclusion. However, the cumulative effect of various other factors such as Brexit, escalating global energy prices, the outlawing from 1 April 2022 of the use of the red diesel usage for construction plant, super inflation, higher material and labour costs and the end of government COVID-19 support schemes has led to increased lending costs and smaller profit margins. As such, the construction supply chain is likely to come under ever increasing pressure in 2022.
The global pandemic continues to challenge us, with various measures ranging from further lockdowns to restrictions on in-person meetings. The judicial machinery, including that in the arbitration world, has continued to function throughout the pandemic notwithstanding the difficulties of embracing innovative processes and new technology.
Cash flow is the lifeblood of the construction industry. This phrase, coined by Lord Denning MR, and cited relentlessly in the construction industry still holds true. In times of recession, following the cash and preserving the funds that are in dispute is crucial. There is no point in spending time and money pursuing a dispute to fight over a pot of cash that is at real risk of being dissipated.
In the UK, adjudication remains one of the quickest and most cost effective methods of resolving construction disputes. As most people adjust to the “new normal” of working from home, an away from the usual office environment, adjudication may not be at the top of everyone’s agenda. That is somewhat ironic given that the current COVID-19 situation is fast becoming a potential breeding ground for construction disputes. Projects are in delay, labour and materials supply may be an issue and cashflow may become and inevitable effect of the lockdown.
Social distancing measures and lockdowns have been replicated across the globe and have brought world economies to all time lows. Understandably, there is now a degree of anxiety to getting back to work. The longer the lockdown goes on for, the harder the bounce back may be. Unsurprisingly murmurings of getting the country back to work are beginning to surface. Some manufacturers and building firms that shut down are now slowly preparing to return to work from a state of hibernation.
The COVID -19 pandemic has already had a massive effect on global economies. Its impact has been unprecedented and there is a degree of uncertainty on almost every facet of daily life.
This article seeks to touch upon issues that may affect those in the UK construction industry specifically, but certain elements will no doubt equally apply across other sectors. Continue reading “Challenging Times: Construction and Engineering in the UK”
In an industry of seemingly ever-tighter margins across the board, it is perhaps unsurprising that the construction industry has fought to continue through the current coronavirus crisis as much as it has. However, many in the industry have stopped work and shut down sites and, despite the current and perhaps somewhat over-optimistic view from the government that work can continue whilst still complying with social distancing rules, it seems inevitable that all non-essential work will stop very soon. Continue reading “Coronavirus and Construction in the UK: The Time to Talk Is Now”