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COVID-19 – Impact on Construction Projects

By John Carey

31st March 2020

COVID-19 has caused significant disruption to the whole of society. The construction industry is not immune to the virus. Currently the building and construction industry is classified as an essential service and therefore not intended to be shut down. However, should the virus spread more draconian measures may be introduced.

So what does a contractor or a subcontractor do if required to shut-down and abandon site? Most Australian Standards do not have specific provision for a pandemic or its effects, but there are some common contractual provisions that may assist.

All contracts are different so regard should be had to specific contractual provisions on a case by case basis, but to preserve possible contractual entitlements, consider the following:

  • Workplace Health and Safety – All contractors have obligations under Workplace Health and Safety legislation to ensure safety of all people on site. Everyone is obliged to perform work in a manner which does not put the health and safety of any person at risk. That would require reporting incidents of anyone with the virus or suspected to have the virus entering site.
  • Change in law – If a statutory requirement changes after the contract award date, most contracts entitle the contractor to reimbursement of extra costs incurred as a result. For example, if the Commonwealth required additional safety precautions or distancing measures that impacted the performance of the work under the contract, most Australian Standard contracts provide an entitlement to an extension of time and additional costs incurred as a consequence of that measure.
  • Preserving entitlements – There are usually strict time requirements for compliance with these clauses. There may or may not be an entitlement to extra costs as a consequence depending on how the contract is drafted. The important thing is to observe time and reporting requirements under these contracts in order to preserve contractual entitlements.

For any further queries, or for assistance with your contract, please do not hesitate to contact our Building and Construction team.

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