In March 2020 Bellway plc announced a postponement of its dividend, citing the impact of Covid on both its production capability as well as consumer demand.
Focusing on production capability, the immediacy of the impact of Covid cannot be understated. Since March, and with almost no time to prepare or mitigate the impact, the coronavirus pandemic has brought unsurpassed levels of uncertainty for the construction industry to navigate, with a range of legislative measures passed and guidance issued by the Government in an incredibly short space of time.
While construction sites were not officially ordered to be shut down due to Covid, its impact has been widely felt across the industry. Many sites were closed due to an inability to operate with social distancing measures in place. Progress on sites that remained open slowed down due to social distancing measures or shortages of labour or materials. While it is hoped that productivity levels will now slowly start to increase, the impact of the pandemic has caused and will continue to cause parties to review their contracts to understand the apportionment of risk between the employer and the contractor.
Many parties concerned that they are already or will soon find themselves in dispute will be dusting off contracts that have been sat in drawers or saved on cloud drives rarely accessed since the often heady and happy day that contracts were executed and the work began or was already underway. Of course many contracts will make no clear provision for what happens when an event such as Covid arises and that leads to uncertainty, which in turn leads to disputes arising.
While the traditional methods of dispute resolution (court or arbitral proceedings) remain available as a means of resolving disputes, the time and cost associated with those proceedings can be prohibitive. If you are midway through a project when a dispute arises, can either party afford to be locked in expensive proceedings which may take a year or more to resolve? What does that mean for the completion of the project itself?