New guidance for reducing covid related disputes published
Build UK has urged construction firms to make future contracts ‘open book’ to avoid disputes arising from delays relating to covid or other pandemics.
The industry body said that these types of contracts, under which contractors are reimbursed based on records of incurred costs, would reduce the risk of disputes by increasing the visibility of what has been agreed in the contract.
In its guidance for construction firms called ‘Managing Covid-19 Within Contracts’, published last week, Build UK said that open book contracts would help firms avoid becoming mired in disputes in the event of the government issuing new covid restrictions while a project is underway.
An example would be if new guidance is issued which reduces the number of workers who can be on site at any one time. Contracts which are not open book can make it difficult to measure the impact of these kinds of regulations, leading to disputes arising from uncertainty over how many on-site workers had been assumed in the original contract.
Build UK said open book contracts “avoids any arguments about what was included or should have been included and leaves the parties free to focus on how best to work around the new constraint”.
The advice comes ahead of the publication of a survey by Constructionline which has revealed that over 80% of companies have unresolved issues relating to delays caused by covid-19.
Build UK’s guidance included advice on existing contracts and urged firms not to use covid-19 as an excuse for problems which predated the pandemic.
It said: “Be honest and take a realistic view of how to allocate responsibility for any problems that pre-dated the impact of COVID-19; resist the temptation to try to ‘hide’ behind COVID-19.”
It suggested firms could separate projects into pre- and post-covid phases to simplify disputes which arise.
It added: “An adversarial approach increases the risk of disputes, abandoned projects and insolvencies. The reality is that fighting for everything may leave you with nothing, so it is essential that all parties work together to find fair and reasonable settlements for what has happened, and mechanisms for managing what is to come.”