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Voice of
the client

How should we deal with the uncertainty of project completion dates? Is there an approach we should take in understanding programme and financial impact?

Ross Gates
E: ross.gates@rlf.co.uk
T: +44 (0) 20 7566 8400
M: +44 (0) 7973 490 890

 

Top-down approach

Since the first Coronavirus lockdown, there has never been so much ‘free advice’ from the construction industry’s legal community on a single subject. Even BREXIT did not receive the coverage that the Covid-19 pandemic now has. Whilst incredibly useful, these legal articles tend to take a top down approach, advising Employers under building contracts and Main Contractors on matters that can help protect them from inherent contractual risk in untested scenarios
Many advise:

  • Check contract terms
  • Ensure all necessary contractual notifications are in place
  • Keep accurate records
  • Put robust mitigation measures in place.

As we move into spring 2021, more and more articles are now starting to cover the increased number of contractual disputes that are arising as a result of Covid-19, whilst the industry seeks either further guidance from central government or legal cases to pass through the courts, to clarify the impact of Covid-19 on contracts and how delays or disputes should be handled.

Pragmatic approach

Though all this uncertainty and turmoil, our goal remains to get our clients to their destination with the least possible pain. This often involves adopting a pragmatic and nuanced approach that considers the need to balance short-term and longer-term business relationships, reputational considerations, and the basic practicalities of overcoming project challenges.

We strongly recommend that all steps need to be undertaken in an open and collaborative environment, whilst seeking not to compromise the contractual positions of any party. If parties feel they can promote their ideas without risking their contractual rights and protections, then we will all be doing the right thing.

We don’t necessarily take the straightest route along that journey, but it is our job to help project teams to identify and mitigate potential pitfalls BEFORE they happen and not just find solutions to problems WHEN they happen.

Factors to consider when estimating programme and financial impact

No two project programmes are the same and financial impact will vary, but there are common factors to consider:

  • Understand your programme and cost risks – ensure everyone is ‘on the same page’
  • Understand the true critical path for the programme on your project
  • Scenario test programme risks – seek to eliminate where possible, include float where not
  • Scenario test cost risks – seek to eliminate where possible, include risk allowance where not
  • Test supply chains – for surety of programme, fabrication, logistics and delivery
  • Test supply chains – for financial stability
  • And then…
    • Keep comprehensive and accurate contemporaneous records
    • Keep comprehensive and accurate contemporaneous records
    • Keep comprehensive and accurate contemporaneous records!

We have always had uncertainty, change and challenges in our industry and projects have always demanded a positive and collective approach to de-risking the project life cycle. COVID-19 is one more project challenge, which has presented practical challenges that have changed the way we go about our business and will continue to challenge us through disputes and possible legal battles ahead. The best route to managing that challenge is to adopt a constant, open, practical, and challenging upfront dialogue throughout each project, to ensure all parties clearly understand the position of everyone else involved.

I strongly recommend that you strive to identify the true nature of your project risks and explore the opportunities to mitigate them, rather than default to a position that focuses on which clause of a contract will present the best opportunity to either off-load responsibility or recover costs. The more we debate our issues and understand the other party’s concerns, the better we will all be equipped to find the optimal way forward for all.

 

 

Ross Gates
E: ross.gates@rlf.co.uk
T: +44 (0) 20 7566 8400
M: +44 (0) 7973 490 890

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