Post-lockdown and the new world order: Construction & Engineering UK

By Vijay Bange and Tanya Chadha

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.

Aston Martin and Jaguar Land Rover have set out plans to re-open their factories early next month with strict safety measures in place. Taylor Wimpey, like some other national house builders, is planning to resume work on multiple sites. HS2 is also now resuming works on Phase one, opening 75% of its sites, with a notice to commence being approved by the government. These companies have spent time planning how they can re-start, whilst ensuring adherence with the government’s social distancing guidelines.

Over the recent weeks, we have widely seen the UK construction industry closing sites.  However, some contractors, particularly civils (which are not necessarily close work operations), have adapted their practices to work to the social distancing measures and have therefore managed to carry on with their works.

Any resumption of works in the construction and engineering industry will not be as simple as picking up from where projects were left before lockdown.  The industry will have to get used to the “new normal” at least for the time being.  A few points are worthy of discussion and consideration:

Social Distancing: It is unlikely that social distancing measures will suddenly disappear overnight.  Most commentators expect a gradual relaxation of the measures. Of course, what actually happens will be driven by the government, and its scientific advisors.  The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020, together with various government guidelines, set out the do’s and don’ts from Public Health England. The Regulations set out those activities / businesses that are essential, and those that are not and had to close.  Construction activities could carry on (in contrast to the US, there is no differential between essential and non-essential construction activities), but subject to various protective measures. The Construction Leadership Council issued Site Operating Procedures (SOP) document (latest version- 15th April 2020) to follow safe social distancing in the construction workplace.  As more and more contractors get back to business, they will have to manage getting used to adapting working practices in a way that has never been seen before.

The Role of the HSE: The Health & Safety at Work Act 1974 requires safe systems of work, and a safe place/environment for workers. The construction industry has received close attention over many years given its historically significant rates of site accidents and the high-risk environment construction sites create. The Health & Safety Executive (HSE) has notified that workplaces must observe, where possible, the social distancing guidelines.  Any disregard or failure to adhere to the guidelines will be investigated.   Contractors are responsible for ensuring that they comply with the guidelines from Public Health England. If they cannot, then they will need to consider closing sites or risk potential investigations / prosecution by the HSE. The HSE will investigate any health and safety issues, and COVID-19 will be treated in the same way as any other risk or peril. Of course, any prosecutions in such instance are criminal rather than civil.

Building Sites: Will need to ensure that workers have requisite PPE, and to work adhering to relevant social distancing. This may not be easy given that builders/ trades typical rely on close team working for example plumber and plumber’s mate. The difficulties with getting supplies of PPE to front line health workers has already been well published and construction sites may encounter similar supply issues.  A proper risk assessment will need to be carried out before sites can open so as to ensure that risks are properly dealt with.

Planning of works: To say the obvious, contractors planning to recommence works have spent time forward-planning protocols for working under the new regime to ensure that they can undertake operations in close proximity to other workers. The government’s current guidance is that construction workers should stay two meters apart where possible, and where not practical, the site supervisor should seriously consider whether that work (or the works as a whole) can actually continue. There will be pressures on site supervisors to get on and deliver, make up the lost time and progress the works.  On top of that, they will need to balance the risks of health and safety breaches and the consequences of potential investigation and prosecutions. Site supervisors will need to decide if work at a particular site can carry on or should be halted on safety grounds. There may be instances where workers on site feel that they must whistle blow and report safety concerns to the HSE.

On-site facilities: Contractors may need to ensure that workers do not use local general public facilities during work hours, and to have their own on site welfare and refreshments provided on site. In short have fully self-sufficient welfare facilities on site itself.  Any reports from the public of transgressions from the safety guidelines are likely to be taken just as seriously as other health and safety complaints.

Programming of works:  Prior to sites being closed, there would have been a programme of works leading up to the contractual completion date. When tendering and pricing for the project, and prior to agreeing the contract price, the contractor would have planned a sequence of works and agreed methodologies. However, now a contractor may need to re-sequence its works to comply with the Public Health England safe distancing, and may need to adopt different working methodologies. The consequence may be that this makes the works more expensive, and cause delay to the end contractual completion dates. In short potential claims for variations, loss and expense / damage, and extensions of time. Perhaps now is the time for parties in such scenarios to agree how they propose to deal with this.

 Resources and materials:  Given that the lockdown has meant that many manufacturers globally are not operating or are operating on a reduced and limited basis, there may well be supply chain issues. As to site labour and trades, we understand from some contractors that there has understandably been a higher rate of absence for reasons of self-isolation, looking after high-risk relatives, or simply concerned about personal safety. Borders have been closed and countries such as India that account for a significant labour resource in the Middle East, has its workforce stuck in lockdown. Will there be a shortfall in resource? In short, there may be some effect on labour supply for a while. This is excluding the Brexit loss of trades and labour issues that now seem a distant memory.

Insurance: Clarity ought to be obtained as to whether insurance policies, for example Contractors All Risk (CAR), still apply, and cover the new COVID-19 related risks. For instance, a worker suffers a fall at site, and there is a claim for personal injury- that would be a matter ordinarily covered by insurance. If a worker contracts COVID-19, and alleges it was from an outbreak traceable to another employee at site, then if he has a claim for personal injury or is unable to work post recover, will the CAR cover this?  Some insurers are now excluding COVID-19 related issues or asking for greater premiums for cover. How will contractors deal with this risk? Can it seek the additional costs as a variation? It may be prudent to speak to your insurance broker for clarifications as to coverage, to ensure insurers are aware of those projects which have restarted, and to inform of the risk mitigation measures in place.

Force Majeure, Change of law, Termination provisions: Parties may now be picking up a project that may reflect a different set of risks, and the project may no longer be viable. Depending upon the course of action that commercially you wish to follow, consider looking at force majeure provisions, change of law, and termination rights.

Future projects in post lockdown era: Projects will need to be planned and sequenced differently to how they were pre-COVID-19. This may invariably impact on price and delivery time for projects. Construction projects may become more expensive. If projects have already been tendered, consideration ought to be given as to whether such projects can be delivered for the price and time previously anticipated. Will contractors be considering pulling out of tenders and asking for these to be re-tendered to factor the new post COVID-19 landscape?

What is evident is that no one knows how long, and in what shape the restrictions will continue. For the foreseeable at least, will those in the construction industry (and indeed business generally) need to re-adjust to the new norm / the post COVID-19 new world order?