Comment: Resolve disputes for the sake of the sector

07/05/2020
Marie-Claude Hemming

Marie-Claude Hemming (pictured), director of external affairs, Civil Engineering Contractors Association (CECA), argues that managing disputes arising from C-19 is vital for the delivery of the second road investment strategy.

The Budget 2020, delivered by chancellor Rishi Sunak in early March, announced the publication of the long-awaited second five-year Roads Investment Strategy for 2020-2025.

RIS2, as it is commonly referred to, promises a £27.4bn investment in the English strategic road network in order to create a road network that is safe, reliable and efficient for everyone.

With schemes such as the A66 dualling, building the Lower Thames Crossing and the Stonehenge tunnel in development, alongside other key regional projects, the chancellor’s announcement in March offered a glimmer of hope for the future of world class infrastructure and economic prosperity for all.

This is reinforced by a substantial programme of local roads investment, ensuring smoother, more reliable journeys from start to finish.

However, the outbreak of COVID-19 has had a substantial impact on the construction sector, as with many others. Work has paused on many sites or it has been streamlined and adapted in order to comply with public health guidelines and industry-wide site operating procedures.

Many firms have furloughed staff and are applying for the generous package of financial support offered by the UK Government to support their businesses during these challenging times.

Such support is extremely welcome, and many businesses are hopeful that they can weather the storm over the coming months.

Yet, there is real concern in our industry about the future. Notably, that we will all become embroiled in costly and long-running disputes over the effects of the pandemic on projects if we do not now look to engage in collaborative discussions and try and resolve such issues as and when they arise.

Without proper fair and reasonable administration of construction contracts, COVID-19 will have a significant and detrimental effect on an industry that is expected to play a central role in helping the economy recover from the effects of the virus.

Research has shown that for every £1bn increase in infrastructure investment, UK-wide GDP increases by a total of £1.30bn, while at the same time, for every 1,000 jobs that are directly created in infrastructure construction, employment as a whole rises by 3,050 jobs.

Last month the Construction Leadership Council (CLC) - the Government-backed group which draws together business leaders from across the sector to identify and address challenges - published a statement on how the pandemic could negatively affect payment and contracts. In doing so, it urged all parties to recognises the unique circumstances we all face.

The CLC asks that industry work together to support the long-term health of our sector by constructively resolving all contractual disputes arising from the pandemic.

To support this ambition, it has produced a piece of practical guidance for industry, which complements that already established by the public sector to mitigate the impact of COVID-19 for the long-term.

Government PPN 01/20: Responding to COVID-10, PPN 02/20: Supplier Relief due to COVID-19 and PPN 02/20: Additional guidance, FAQs and model terms for construction seek to give public sector bodies freedom and encouragement to support construction supply chains through collaborative approaches to payment and the revision of contractual clauses.

The CLC believes that these same principles must be reflected across the whole of the industry for it to survive for the long-term.

This means that we must all work through the contractual disputes which will arise as a result of the pandemic, with no party bearing an insupportable burden of the cost.

Our guidance is supported by Government who, through its membership of the CLC, has asked that all parties within supply chains try and resolve contractual issues arising as a result of COVID-19.

The CLC COVID-19 Contractual Best Practice Guidance provides examples of the types of issues that are likely to arise, together with practical advice on how to resolve them in a constructive manner.

Its aim is to work in tandem with guidance published by the UK Government on driving responsible behaviour in the performance and enforcement of contracts impacted by the COVID-19 emergency. Our document has been produced as a guide only and is not intended to cover all contract types and all issues.

This is a rapidly developing situation and we are continuously seeking feedback from industry on the challenges faced and the measures announced to date.

In the light of the pandemic, the hope is that industry will come together to minimise potential disputes in order to secure prosperity for the long-term.

It is imperative that all businesses understand the unprecedented situation we find ourselves in and work collaboratively through the challenges that will arise, and as such, avoid the need for future legislation.

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