Remobilising UK Construction needs Guarantees, not Guesswork- Part 2

By Steve Nichol and Matthew Friedlander 

Last week we discussed, in light of the encouragement from Robert Jenrick MP (Secretary of State for Housing, Communities and Local Government) for the construction industry to remobilise, the government’s apparent reluctance to provide confidence and clarity for the construction industry in respect of the safe operation of sites.

In the Prime Minister’s address to the nation on 10 May 2020, he re-stated that encouragement for the construction industry, where possible, to return to work.

Construction sites have been allowed to remain open provided current guidelines are adhered to, including social distancing recommendations. We commented last week that in issuing guidelines for safety alongside mandatory rules (namely the Coronavirus Act 2020), the Government created significant ambiguity as to whether or not those guidelines were themselves mandatory or merely advisory. The short point is that it has, for the most part, been left to employers and contractors to decide for themselves whether a site should remain open.

Since our last blog, the Government has published further guidance entitled “Guidance on responsible contractual behaviour in the performance and enforcement of contracts impacted by the Covid-19 emergency”. We have summarised and discussed that guidance in a separate article.

The issue with the government’s approach is that even though most of the current standard form contracts contain extensive extension of time and / or loss and expense clauses, in many cases it will remain unclear who bears the burden of the additional delays or expense that will inevitably be incurred due to COVID-19, and in what proportions.

There is no doubt that, despite the encouragement from the Government, it is not business as usual in the constructing industry at the moment. Our previous article considers some of the practical measures that should be considered when re-mobilising to site. Even where work is continuing, implementing safety measures like social distancing is resulting in a reduction of shifts or the level of resource on site at any one time, thereby leading to a reduced output. Works are being delayed and additional costs incurred commensurate to the extended duration of the works. Furthermore, taking steps to protect the safety of workforces through, for example, acquiring PPE will also come at an added expense.

The government’s latest guidance, which of course is not aimed solely at the construction industry, amounts to a request for parties to act in a fair and collaborative manner without unnecessarily exploiting contractual remedies. While such an approach is certainly to be encouraged and if adopted by parties could go a long way to avoiding disputes, it is optimistic, and perhaps even unrealistic, considering that in the best of times the construction operates with notoriously small margins and consequently significant financial uncertainty.

It is suggested that the better approach for the government should be, rather than issuing guidelines, to implement on a mandatory basis key and unambiguous safety measures for the operation of construction sites as they may relate to COVID-19. This would resolve the current uncertainty as to the contractor’s right to relief for complying with guidelines, as the vast majority of extension of time clauses address circumstances where the progress of the works is affected by the government exercising a statutory power. It would also ensure that parties could return to work with confidence that there was less risk of accusations of unsafe practices, and that they were acting in compliance with their contractual obligations.

The downsides to the government in implementing those kinds of mandatory and unambiguous measures are three-fold.  Firstly, it will require care and precision to draft at a time when the goalposts are always moving and the measures are required in very short order.

Secondly, there is an increased risk that contractors would review those measures and conclude that they could not feasibly return to site, which would undermine the government’s political goals.

Thirdly, employers (including the government itself) would not be happy with such an approach as it would very likely then fall to them to foot the bill for COVID-19.  However, since those same employers will ultimately reap the benefits of the progress and completion of their works, it seems reasonable that employers should pay for that benefit.  It would of course be open to employers to suspend the works if they do not want to incur the additional cost associated with continuing work in these circumstances.

Nevertheless, as matters stand it seems that the government does not intend to issue mandatory measures to resolve the current uncertainty, and parties will have to do their best to navigate the guidelines provided.