The impact of COVID-19 on the construction industry: adapting to change in these extraordinary times

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The impact of COVID-19 on the construction industry: adapting to change in these extraordinary times

Published 30 abril 2020

The construction industry is used to dealing with difficult times and adapting to change. However, the COVID-19 pandemic has presented completely new and exceptional challenges, leaving many firms battling to survive.

It is now over a month since the country was ordered to go into lockdown on 23 March 2020 and we have passed the grim milestone of 20,000 deaths. The lockdown has been extended for at least another three weeks to 7 May 2020 and the Government are shying away from any announcements as to how the restrictions will be reduced or when. It is anticipated that there will be a phased return to work but whether that will by sector, age or location can only be speculation.

There is, however, some positive news. The infection rate has fallen, the number of patients in hospital across the country has dropped and the capacity for testing is rising. Nevertheless, there is still so much that we don’t know about this novel virus. Although trials of new and re-purposed medicines which could cure or alleviate the symptoms of COVID-19 have started, no effective treatment has yet been found. The development of vaccines has been taking place at record breaking speed with clinical trials already underway. However, even if successful, it will be a significant time before vaccines are generally available. Big questions remain to be answered as to whether immunity is achieved after infection and, if so, for how long. Whilst so much remains unknown about COVID-19, the construction industry, like so much of society, must muddle along for the foreseeable future and adapt to these new “normal” circumstances.

Before the lockdown was formally announced, many construction firms had already started making plans to close sites anticipating what was to come. Nevertheless, in the first few days of lockdown, chaos ensued in the construction industry with conflicting announcements as to whether construction sites could remain open. Wary of its effect on the economy, the Government did not provide a definitive answer leaving construction firms to decide whether they could safely maintain the 2 metre social distance guidelines (which were subsequently varied to include the caveat of “wherever possible”) and protect their workers’ safety. While the Mayor of London called for all construction sites to close, the message from the Government was that construction sites could stay open and work could continue but only if it was done safely Public opinion was hostile to sites remaining open which was seen as flouting the rules and the industry came under pressure in both directions on the issue of site closure. Those construction firms that had not already done so, started to make plans to safely close sites.

The confusion and pace of change that faced construction firms was illustrated by the Site Operating Procedures (SOP) published by the Construction Leadership Council (CLC) on 23 March 2020 to implement the Government’s social distancing recommendations. The CLC strongly recommend that these procedures, based on Public Health England (PHE) guidance, should be implemented by “every operational construction site, with the aim of having a standard approach across the industry that all firms and workers can adopt”. The CLC advised that those sites that could not implement the SOP should not remain open. SOPv1 acknowledged that there would be situations where it was not possible or safe for workers to distance themselves from each other by 2 metres. SOPv1 was followed by version 2 on 2 April 2020 which clarified that, where it was not possible for workers to keep two metres apart, work should not be carried out. However, within hours SOPv2 was revoked and SOPv1 was re-issued with the industry advised that this was the one to follow. Version 3 was then published on 14 April 2020 which included risk reduction measures where 2 metre distancing rules could not be obeyed. No wonder there was confusion. It should be noted that this SOP only applies in England; other restrictions and advice may apply in Scotland, Wales and Northern Ireland.

On 7 April the Government published additional sector specific guidance on social distancing for those working in the construction industry. This is referred to in SOPv3. Whilst SOPv3 provide useful “guidance” it stops short of instructing the industry of what it should do. Responsibility for the action taken remains with the employer, contractor or sub-contractor. SOPv3 highlights that the HSE is the relevant enforcing authority for PHE guidelines and warns that if a site is not consistently implementing the measures set out by PHE, it may be subject to enforcement action. The HSE has also issued guidance confirming that COVID-19 is a reportable disease under RIDDOR where there is reasonable evidence that it was caused by exposure at work.

The Government has not yet taken any steps to exercise its broad powers under the Coronavirus Act 2020 to shut “premises” and, at present, it seems unlikely that these powers will be widely used to force closure of construction sites. As time has gone on and the likely effect on the economy becomes clearer, more firms have started to resume operations. For some firms this may be because they have worked out how to grapple with the SOP guidance but for others the decision may simply have been taken as cashflow was desperately required. However, some sites which had re-opened, have rapidly closed, for failing to comply with the SOPv3 guidance. New work patterns are emerging and contractors are seeking extensions to the working day from Local Authorities, with mixed success, to enable shift work to be introduced.

Social distancing guidelines are not the only hurdle to overcome. For example, there are problems with the supply of materials, products and accommodation for construction workers living away from home. Cash flow is now critical and despite the unprecedented level of financial support for businesses made available by the Government, companies are going insolvent. The statistics show that the industry is already in a deep recession.

Disputes are an inevitable consequence of the COVID-19 pandemic. Parties to construction contracts will need to ensure that relevant contractual notices are served on time to protect their rights. We can expect to see many claims for extensions of time and loss and expense/costs. Claims are also being made or threatened on Performance Bonds where sites are not proceeding regularly and diligently. Another immediate concern, is the seeking of declarations for incorrect suspension of works. This is before the industry starts to count the costs of insolvency in the supply chain. Unfortunately legal disputes will just add to the challenges being faced by the construction industry in these extraordinary and testing times.

Authors

Mark Roach

Mark Roach

London - Walbrook

+44 (0)20 7894 6314

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