Nearly 50% of firms have reported an increase in disputes during the pandemic
Clients are picking up the bulk of the burden from covid-19, according to research from Turner & Townsend.
A survey by the consultant showed the majority of liability arising from covid-19 events was believed to be held by the contractual employer rather than the supplier.
The findings highlight a clear need for greater clarity over contract terms, with 45% of those surveyed reporting an increase in contractual disputes since the start of the pandemic.
A third of firms also said they believed their contracts were unfit to address the effects of notifiable covid-19 events – partly due to the interpretation of liability for unforeseen events and reliance upon force majeure clauses.
T&T said this was exacerbated by the fact that 83% of respondents experienced a pause or temporary site closure because of covid-19 and that 72% said productivity generally has reduced on projects currently on site compared to pre-pandemic levels.
Nick Jones, associate director in contract services at Turner & Townsend, said: “The covid-19 pandemic hit live projects with delays, site closures and reductions in productivity. Almost a year on, though, and we still do not have enough clarity on the liability within construction contracts.
“As contractors and clients alike now seek to recover losses incurred during the pandemic, it’s important to seek specialist advice. If 2020 has taught us anything, it is that all parties will now want to ensure clarity for covid-19 event liability through the drafting of expressly worded contract terms, and the contractual ‘employers’ may also be looking to address the current imbalance of risk and responsibility for the future.”
The survey also found that 43% of respondents considered covid-19 events insufficient on their own to claim additional time or money and that as a result, 63% of respondents have sought contractual guidance from the government due to the uncertainty. Another third were consulting industry bodies or other industry professionals.
The research found 49% of contractors were allowing for covid-19 related costs in their tender submissions.