As a result of COVID-19, the construction industry has been forced to adapt to significant challenges and formulate project-by-project solutions to mitigate the delays and other impacts caused by COVID-19 whilst protecting commercial interests. This publication discusses how COVID-19 is impacting the construction industry and best practices for owners and developers when responding to these challenges.
Key takeaways include:
- Workplace safety guidelines must be in place. Minimizing the spread of COVID-19 has become a top priority for all responsible participants in construction projects. Thus, key participants (including the owner/developer, general contractor and key subcontractors) will need to jointly develop a plan that identifies COVID-19-related health and safety precautions to be deployed at the jobsite.
- Systemic approach in handling COVID-19 is key. Before developing specific solutions, we recommend project owners, especially those with multi-site (including multijurisdictional) construction programs, develop a unified approach on how to handle COVID-19 systematically and effectively.
- Maintain record of impacts. In the event a construction site is shut down due to a governmental order, owners should meet with their contractors to determine the status of their projects at the time of the shutdown and the work remaining.
- Determine cost and schedule impact. Parties to contracts predating the outbreak of COVID-19 must analyze the usual time extension and additional cost grounds, as well as any force majeure and change in law provisions, to understand how the risk is allocated between owner and contractor.
- New negotiation points. Parties should consider compensation, delay entitlement, force majeure, changes or extra work clauses, and changes in applicable law, and other provisions in future construction contract negotiations.
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