Covid-related contract disputes

IR35 Q&A: What construction firms need to know about the changes to off-payroll working, p46

Warning over covid-related contractual disputes

CLC survey indicates an increase in notifications and claims because of the pandemic

Construction businesses risk getting

bogged down in legal disputes related to the pandemic, the Construction Leadership Council (CLC) has warned.

The CLC urged the sector to follow guidance it has produced to ensure the “fair and reasonable administration” of contracts, cautioning that, without it, covid-19 could have a “significant and detrimental effect” on the industry.

A CLC survey indicated an increase in notifications and claims under construction contracts because of the pandemic. This included chasing issues on legacy projects to increase cash reserves, trying to recover commercial positions due to the direct impact of covid-19 on current projects.

The survey also indicated that many pandemic-related claims were

“By and large, developers and contractors have worked hard to tackle problems together” Francis Ho, Penningtons Manches

being rejected, and while parties were inclined to settle an entitlement to additional time for completion, there was a “reluctance” to agree financial losses, costs and expenses.

The CLC said: “Commercial behaviour has changed since covid-19. In the short term, many reports indicated a positive and increased level of collaboration within Q2 and Q3 of 2020. However, in the longer term, indications were that commercial behaviour was hardening throughout the supply chain, including greater emphasis on management of existing contracts, sub-economic pricing, and protective discussions on risk allocation in new contracts.”

Francis Ho, chair of the CIOB contract and procurement special interest group and a partner with Penningtons Manches, said: “The findings are consistent with our experiences. On occasions, a party has looked to take advantage of the situation, for instance, trying to pass off unrelated delays as covid-based but, by and large, developers and contractors have worked hard to tackle problems together and prioritised safe working conditions.”

Trowers & Hamlins partner Clarissa Smith warned: “If the industry is to overcome these challenging times and avoid disputes escalating and damaging the very relationships which will be critical to the rebuilding of the economy, then early intervention, effective contract management and collaboration will be vital.” ●

CLC chair repeats concerns over fair payment

Mitchell calls for tougher action on late payers

Construction Leadership Council (CLC) chair Andy Mitchell has said he remains concerned about payment delays in the construction supply chain during the pandemic.

In an interview with CM (see p14-16), Mitchell said: “Personally, I would like to see tougher action on late payers. But I think there’s a way of doing that without legislation. We need more visibility of payment league tables, from public clients all the way down through the supply chain. No one wants to be at the bottom.”

Last year, the CLC urged construction companies not to invoke penalty clauses in contracts, warning such actions “will be remembered” and that “all firms should think hard about how their reputation could be damaged by not doing the right thing”.

The latest Build UK ‘Duty to Report’ figures on construction sector payment performance show Vinci as the quickest paying main contractor, taking an average of 26 days to pay invoices, with Multiplex the slowest, at 55 days. Build UK fastest paying contractors

1. 2. 3. 3. 5. 6. 7. 7. 9. 9. 9. 9. Vinci Morgan Sindall Sir Robert McAlpine Mace Amey Interserve Willmott Dixon Osborne Wates Sisk Laing O’Rourke Ilke Homes 26 days 27 days 28 days 28 days 29 days 30 days 31 days 31 days 32 days 32 days 32 days 32 days