Covid-19, Brexit and the Ukraine war have created a perfect storm leading to inflation, material cost increases, and delays throughout the construction industry.

As a lawyer specialising in construction disputes, I see more and more cases come across my desk where disputes have arisen which may not have done so had it not been for the financial and political climate.

So how do you minimise the risks arising from these “unprecedented times”?

Although it may seem like a negative mindset, even before you take on a contract, start thinking about what might go wrong, and draft your contract accordingly. For example:

  • Scope: Does the contract properly describe the works? Are there any important caveats to be included?
  • Allocation of risk: Does the contract deal with responsibility for certain risks? Is it clear where a contractor will become entitled to a variation?
  • Price: How are the works and variations valued? Have possible price increases been considered?
  • Programme and delay: Does the programme provide enough contingency for delay? If delays do happen, who bears the risk? Are there clear provisions dealing with extensions of time and liquidated damages?

Considering all these issues won’t guarantee that everything will run smoothly, but will assist if things do go wrong.

Ok, so now you are in throes of a project. How can you protect yourself from problems? Proper contract management is key:

  • Payment mechanisms: Are parties clear on the deadlines for applications and payment notices? Failure to issue notices properly under payment mechanisms can have draconian consequences so it is very important to follow the contract.
  • Programme: Keep an eye on your programme. Are delays looking likely? If so, have considered if an extension of time is needed? Do you need to issue an early warning?
  • Changes to scope: Make sure changes to scope are properly documented and valued in compliance with the requirements of your contract.
  • Communication: Regular progress meetings and good communication between parties and supply chains can help to avoid problems turning into disputes later down the line.