At the time of writing this blog, coronavirus (officially named COVID-19) has affected over 80 countries. The outbreak of coronavirus raises significant health and safety, employment and worker issues for businesses: this post specifically highlights matters that may arise in the construction sector.
There are a number of practical considerations that businesses in the construction industry must be aware of in order to manage their workforces in light of recent guidance. Risk assessments should be conducted and appropriate preventative and protective measures be put into place. The inevitable interference in the production of goods, reduction of materials and travel will be acutely felt in the construction industry.
With travel limitations, difficulties in obtaining work visas and workers having to self-quarantine, the UK construction industry may face workforce shortages and the challenge of operating without previously relied upon key players. Our recent Employment blog highlights some practical considerations for employers.
Many factories in mainland China have been forced to shut affecting the amount of building materials being produced. Stringent quarantine measures imposed by customs will affect timely entry and increase the cost of equipment. Public transport and freight services have also been disrupted. Consequences will be the need to plan for building material shortages and the impact this will have if contractors/sub-contractors are unable to progress with works in addition to the knock-on delays that will ensue.
A recent example of this is JCB cutting production and working hours at its UK factories due to a shortage of components from China. If your supply chain is likely to be affected it is important to consider alternatives at an early stage. Where a high number of specialised components are relied upon, it may not be possible to quickly switch suppliers.
3. Keeping records is essential.
A record of the effects of coronavirus on a project in terms of both time and cost should be logged and kept up-to-date, along with any attempt to mitigate the impact of the project's delivery.
4. Dealing with supply chain and cessation of work
The multi-layered nature of a construction project often involving several sub-contractors adds a further layer of complexity when assessing where risk lies and what the outbreak means in terms of contractual obligations and force majeure. These issues are discussed in our Construction blog issued earlier today.
Parties are encouraged to take proactive steps to review their existing medical and insurance policies, including business interruption insurance. Consider whether your insurance policies are likely to cover the indirect and direct effects of the outbreak.
Long term considerations
Many would hope that developers will exercise a degree of leniency in respect of time extensions and additional costs if the cause of the delay is due to the outbreak of coronavirus. However, this is by no means certain and businesses should not assume that this will be the case.
There remains a great deal of uncertainty around coronavirus including the operational and legal effects; accordingly continued monitoring is necessary as further issues may arise if the outbreak spreads more widely. Businesses should keep the situation under review and be aware of evolving information including updates to current government guidance.
If your construction project has been or is at risk of being affected by coronavirus, we recommend seeking advice as early as possible so that you can evaluate the risk and understand what options are available to you. This will enable you to be able to act efficiently and protect your project.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.