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Covid causes spike in size of construction contract disputes

The pandemic may have repeatedly been described as 'unprecedented' by all and sundry, but that has certainly not been a reason for an outbreak of good-hearted contractual leniency or Employers cutting Contractors or Sub-Contractors some slack!

According to a survey of the disputes handled by global consultancy Arcadis, and reported by @ConstructionEnquirer, the average value of disputes has hit its highest level since 2011. It said that the average value of construction disputes involving its clients more than doubled to £28m last year, which it puts down to programmes and costs increasing due to the impact of Covid-19 on sites.

Around three-quarters of those surveyed blamed Covid-19 impacts for the rise and uncertainty around which party was liable for the time and cost risk arising from the pandemic. The findings echo what we are seeing and hearing from Contractors and Sub-Contractors right across the construction industry - typically a result of the parties failing to understand or comply with their contractual obligations.

In two disputes we know of, the Contractor thought they were fine because they were awarded more time. However, this was only for the time of the site closure due to government enforced restrictions. It did not, therefore recognise, all the other factors that affected productivity on site - restrictions that caused reduced output, PPE requirements, smaller gang sizes, the need for social distancing or difficulty of getting imported products due to port closures.

All this points to the need to get the right contracts in place before you start work on-site - it may sound obvious but all too often contracts include onerous terms that could cost Contractors or Sub-Contractors dearly if they are either not fully understand or met within the specified deadlines/timeframes.

This is why it is so important to read contracts thoroughly and if there is anything you do not understand you should seek specialist advice - that's exactly what we do through our Contract Vetting service.

Often - and not just during the pandemic - contract terms may not be met because they are overlooked during the project due to a lack of time and resources as Contractors and Sub-Contractors work hard to deliver their contract. Interestingly, the Arcadis survey found that the second and third most common causes of construction disputes were "errors and/or omissions in the contract document" and "failure to make interim awards on extensions of time and compensation".

Again, these issues can be avoided by outsourcing you contract management and administration to Quantum CPM.

Through our Bundle of Services, we will take care of all your contract administration and management so you don't have to think too much about it, safe in the knowledge that we are ensuring you meet your contractual obligations. This includes seven individual services, which can be used as and when required. All are low cost to make them affordable and accessible for Contractors and Sub-Contractors large or small.

To discuss how these services can help your business, please call 0161 974 6655 or email for an informal discussion.