Fears grow over Covid contract disputes as attitudes harden
Construction leaders fear the industry could be heading for a big rise in contract disputes as signs emerge of hardening attitudes against claims for financial loss.
The Construction Leadership Council said that while the industry had worked together last year to get sites up and working, a survey has revealed the mood is changing.
Now there was real concern that as impacted projects begin to complete businesses will become embroiled in costly and long-running disputes over the effects of Covid-19 on projects.
It also warned that the indications were that 2021 may bring the ‘perfect storm’ of Brexit; reduced construction activity; the end of government business support schemes; introduction of reverse charge VAT and a significant increase in the number of claims across the supply chain.
The CLC surveyed was carried out among a range of leading industry professionals in the field of construction claims and disputes.
This revealed there had been an increase in the number of Covid-19 related construction claims being rejected.
Initial indications found that while parties were inclined to settle an entitlement to additional time for completion, there was reluctance to agree financial losses, costs and expenses.
Those responding said that high rise projects and finishing and commissioning trades would face the greatest contractual difficulties.
The survey uncovered anecdotal evidence of commercial behaviour hardening throughout the supply chain, including greater emphasis on management of existing contracts, increased tender lists and sub-economic pricing, increasing insolvencies and robust protective discussions on risk allocation in new contracts.
The CLC warned that without proper fair and reasonable administration of construction contracts, Covid-19 could have a significant and detrimental effect on the industry.
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