February 7, 2022
Both the Federal and State Governments have made substantial public investments into the construction industry to kick-start the post-pandemic economy in 2022. Each State has different covid restrictions in place which means accelerated post-pandemic project announcements coupled with varied jurisdictional requirements may create complexities when dealing with contract administration.
Covid Concerns
The table below sets out the typical project covid concerns:
| Issue | Summary |
| Labour Shortage | 1. Border closures and government isolation/quarantine directives resulted in a skilled worker shortage.
2. Implementation of company mandates aimed at the health/safety of employees to ensure project completion and reduce project delay. |
| Supply/Procurement | 3. International border closures halting the procurement of materials and equipment.
4. Disruptions to production, manufacturing, and importation resulted in a shortage of steel, timber, concrete, and aluminum and increased demand for key materials. |
| Delay | 5. Consequence of the labour and supply shortage resulting in contractor liability for delayed project completion. |
| Cost Escalation | 6. Supply shortages coupled with rising demand for materials means increased construction costs for contractors.
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The items identified in the table above require careful consideration when administering contractual arrangements between principals and contractors. Fortunately, proper risk allocation informed by the experiences of the last two (2) years may contractually manage, minimize, and mitigate Covid risk.
Covid Clauses (The New Normal)
Covid Clauses have emerged to address Covid specific delays and other associated issues. Post-pandemic contractual arrangements will now (almost always) consider triggers for:
| Clause | Drafting |
| Force Majeure | Include definition of ‘pandemic’, ‘epidemic’, and/or related government orders as a qualifying force majeure event. |
| Escalation | Contractors may seek cost recovery when price for identified materials increases. |
| Suspension | Covid events may provide a right to an extension of time, delay cost and time, or (in limited circumstances) just cost. |
| Termination | For prolonged Covid events (i.e., lockdowns, government site shutdowns, etc.) may give rise to a right to terminate. |
The abovementioned items are some of the typical Covid based project considerations. Incorporation of Covid clauses into contractual arrangements to increase security for both parties, will create a mutually beneficial approach to risk allocation and long-term management of Covid risks.
Lamont Project & Construction Lawyers
Lamont Project and Construction Lawyers have a comprehensive understanding of the intricate risks and knowledge required to support and advise on construction projects. We have the industry knowledge and experience to assist both principals and contractors in all major construction projects with their unique challenges when administering contractual arrangements and implement Covid Clauses which best align with project objectives and deliver the optimal outcome.
If you have any questions about may matters raised in the above article or the forthcoming series as it relates to your specific circumstances, please contact Lamont Project & Construction Lawyers.
The content of this article is for information purposes only; it does not discuss every important topic or matter of law, and it is not to be relied upon as legal advice. Specialist advice should be sought regarding y our specific circumstances.
Contact: Peter Lamont or Quinn Hironaka
Email: [email protected] or [email protected]
Phone: (07) 3248 8500
Address: Suite 1, Level 1, 349 Coronation Drive, Milton Qld 4064
Postal Address: PO Box 1133, Milton Qld 4064