Have the English Contractors been left out in the cold compared to the Scottish Contractors?
On 9th April 2020 the Scottish Parliament issued their Coronavirus Impact on Construction Contracts Notice which compliments the Scottish Procurement Policy Notice and Construction Sector Guidance. I have seen no such notices covering the English construction industry. Have the English been left out in the cold?
The objective is stated as to help ensure that Scotland, both locally and nationally, retains a viable construction sector and that businesses emerge ready to resume work on existing projects and new opportunities.
Scotland states that they will take a responsible approach to ensure that their construction sector retains the capability and capacity necessary to effectively recommence work and deliver the current and future construction project pipeline. The notice is aimed at all those contracting authority staff involved in the planning and delivery of public works construction projects.
Scotland recommend honestly, openly and constructively discussion recognising the mutual need of clients and contractors to pragmatically address issues relating to COVID-19 but warn that it should not be exploited as an opportunity to gain from the loss of another party.
With regards to future projects the authorities should determine if it is practicable to maintain their current project pipeline including the related programme of procurement activity for construction contracts. For all non-essential works the authority should determine if it is necessary to introduce a hold point at contract award to delay the commencement of any on-site works for a suitable period. This seems to me like a positive approach.
They are also recommending the suspension of any requirement for “wet” signatures on contract documents in favour of a typed signature or an electronic facsimile or scan of the appropriately-designated signatory’s true manuscript.
A flexible approach to the Programme is recommended. Where they are planning a hiatus between practical completion and occupancy, it is suggested there may be scope to prolong the construction programme to accommodate anticipated but unforeseeable site disruption due to COVID-19.
It is recommended that the authorities seek to agree with the contractor, a process for identifying and recording prolongation and disruption directly attributable to COVID-19. This should minimise the potential for doubt to arise in the interpretation of prevailing circumstances on site.
An example of this would be where workers or trades that would normally work concurrently in enclosed spaces can only now do so consecutively due to the imperative for social distancing.
The authorities are told to look at the provisions in all live projects in order to fully understand terms relating to:
·suspension of work other than that necessary for ensuring site safety and security the responsibility for which must remain with the contractor
insurance cover including but not limited to suspension of work
·. safe resumption of work when COVID-19 restrictions are suitably relaxed, and /or robust operating procedures are in place
· extension of time
· loss and expense
· liquidated and ascertained damages
· rules governing retentions or equivalent form of defects’ liability assurance
· force majeure
With regards to existing contracts the authorities are told to urgently engage with contractors in order to ascertain their current status on a range of key matters including:
· progress to date on site relative to programme
· value of work executed on site
· impact of supply chain disruption and supporting payments
· applications made to Her Majesty’s Government and/or Scottish Government. for emergency loans, grants and the like, including for supply chains
· any other matters of importance and relevance in light of COVID-19
Authorities should in a positive supportive manner consider what flexibility exists within their corporate governance to enable actions which would be substantive in meeting the guidance provided. This may include the following:
· the introduction of typed / scanned manuscript signatures to expedite contract execution in lieu of “wet” signatures meantime
· securing continuance on site of those projects’ categorised as essential
· where social distancing cannot be achieved, making arrangements for their orderly suspension and effective resumption
· payment of overheads and establishment costs on sites not at full capacity
· avoiding the application of liquidated and ascertained damages where at all. possible
· granting extensions of time where necessary
· initiating mid-monthly or weekly interim payments
· where a project bank account is not in place, ensuring that payments are disbursed by the main contractor fully and promptly to their subcontractors
· making direct payment to subcontractors
· the prompt and proportional release of retentions taking cognisance of work done in order to aid contractors’ cash flow and, where a project bank account is not in place, to require this to be effected and evidenced down the supply chain in public works contracts to which it is applied
· maintaining constant contact with contractors and monitoring progress on site.
It is recognised that authorities themselves will be affected by staff absences and consequent attrition to their corporate capability and responsiveness.
The Scottish Government expects every reasonable effort to be made to safeguard the workforce and to be ready to work towards achieving full capacity when this becomes possible. The English Government and all clients of our industry could well do with adopting this type of approach.
This just goes to show that we can all learn a thing or two from north of the border.
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