{"id":76845,"date":"2020-05-29T07:00:12","date_gmt":"2020-05-29T06:00:12","guid":{"rendered":"https:\/\/www.pbctoday.co.uk\/news\/?p=76845"},"modified":"2021-05-06T11:54:31","modified_gmt":"2021-05-06T10:54:31","slug":"construction-disputes-2","status":"publish","type":"post","link":"https:\/\/www.pbctoday.co.uk\/news\/planning-construction-news\/construction-disputes-2\/76845\/","title":{"rendered":"\u2018Time is running out\u2019 to avoid construction disputes"},"content":{"rendered":"

The clock is ticking to avoid mass construction disputes, as many contractors will have the ability to terminate coronavirus-disrupted contracts this summer, says consulting firm Accuracy<\/a><\/h2>\n

Accuracy explains that \u2018force majeure<\/a>\u2019 notices have been triggered, stopping work on numerous construction sites in recent weeks. Under one of the standard forms of contract \u2013 FIDIC model contract \u2013 used by many multinational contractor groups, both the project owner and the contractor can choose to terminate the contract once work has stopped for 84 days due to an exceptional event.<\/p>\n

This 84-day period will expire for many projects this summer,\u00a0as early as 31 May depending on geographies,\u00a0which could\u00a0give rise to\u00a0a significant increase in\u00a0the number of\u00a0construction disputes<\/a>.<\/p>\n

Project owners may seek to use\u00a0this as an opportunity to\u00a0remove contractors on projects that had previously suffered delays and cost overruns and contractors\u00a0could look to exit projects that have become unprofitable.<\/p>\n

However, where termination occurs, it often signals the start of a dispute that may only be resolved through a time consuming and costly litigation or arbitral process, adding to the delays caused by Covid-19<\/a>.<\/p>\n

Avoid disputes<\/h3>\n

Accuracy\u00a0warns that to prevent contractors walking away from projects that have become unprofitable, project owners should consider whether\u00a0to\u00a0make additional payments to contractors.<\/p>\n

For example, payments on items such as increased prelims incurred because of Covid-19, this would make it sustainable for them to continue working on projects\u00a0where\u00a0they have performed well.<\/p>\n

Both project owners and contractors should be looking to\u00a0engage in\u00a0open discussions in order to avoid costly construction disputes down the line.<\/p>\n

Herv\u00e9 de Trogoff, partner at Accuracy, commented: \u201cTime is running out on many construction projects for owners and contractors to prevent disputes in the near future.<\/p>\n

\u201cIf they don\u2019t negotiate pragmatically, they risk getting caught up in arbitrations and litigations<\/a> that could have been avoided.<\/p>\n

\u201cProject owners need to look at the big picture of the repercussions of these disputes on their organisation\u2019s goals and also the long-term effects on the delivery of the project.<\/p>\n

\u201cNegotiating revised terms that take account of the negative effects of Covid-19 on the contractor\u2019s productivity or\u00a0that provide contractors with advances on payments could be the surest way to ensure the works are completed in an acceptable timeframe.\u201d<\/p>\n

Take a pragmatic approach<\/h3>\n

Stephen Lee, senior manager at Accuracy, added: \u201cAt the moment only a small percentage of project owners are taking the pragmatic approach of offering some financial relief to their contractors.<\/p>\n

\u201cThe lockdown restrictions mean that some projects will have been on hold for weeks already, we would strongly advise that parties make a deal as quickly as possible to stop projects falling even further behind and being funnelled into a route of costly and time-consuming arbitration and litigation processes.\u201d<\/p>\n

\n<\/div>","protected":false},"excerpt":{"rendered":"

The clock is ticking to avoid mass construction disputes, as many contractors will have the ability to terminate coronavirus-disrupted contracts this summer, says consulting firm Accuracy.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[304],"tags":[853,88176,676,664,283],"stakeholder_rel_tag":[],"contributor_rel_tag":[],"class_list":{"0":"post-76845","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-planning-construction-news","7":"tag-adjudication","8":"tag-construction-disputes","9":"tag-construction","10":"tag-construction-services","11":"tag-finance"},"acf":[],"yoast_head":"\n\u2018Time is running out\u2019 to avoid construction 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