DTMR Article 2

The New Normal: Part 2 – Annexure D (COVID-19)

October 24, 2022

The Queensland Department of Transport and Main Roads (‘DTMR’) ‘Annexure D’ provides an opportunity for contractors to obtain relief for COVID-19 related impacts to a project. Annexure D allows contractors to seek relief for the direct cost and time impacts associated with COVID-19.

Annexure D provides two avenues of relief for contractors who encounter these impacts:

  1. Pandemic Directives; and
  2. Pandemic Relief Event.

Pandemic Directives

If a contractor encounters a change in works or is required to alter its working methodology due to a Pandemic Directive (being, directions made by an Authority arising out of or directly related to COVID-19), Annexure D provides an entitlement to have additional costs incurred assessed pursuant to the contractual valuation process.

Contractors are further required to provide the contract administrator with early warnings of delay or disruption and to closely monitor potential impacts arising from Pandemic Directives. The entitlement for the valuation of additional costs incurred as a result of Pandemic Directives is subject to contractors satisfying this condition.

Pandemic Relief Event

Contractors are entitled to submit a claim for a Pandemic Relief Event if COVID-19 has caused a delay or disruption to the project which adversely effects the carrying out of work under the contract (‘WUC’). This includes delay or disruption arising out of a Pandemic Directive.

When contractors become aware of any Pandemic Relief Event, they must provide the administrator with written notice detailing the delay/disruption event, its expected duration, and any relief plans prepared to deal with the associated consequences of the event. Failure to do so may void any entitlement previously held by a contractor to make such claim.

Contractors must also:

  1. prepare and submit an updated Contract Plan and Construction Program to the contract administrator detailing all systems, procedures and mitigation plans required to be implemented and the times within which the various parts are to be executed or completed;
  2. implement the mitigation measures outlined in its updated Contract Plan and Construction Program to minimise the impacts of the Pandemic Relief Event;
  3. provide costing and programming impacts on an open book basis; and
  4. ensure all obligations and relief are passed down to its subcontractors and suppliers.

Special Contract Conditions

Annexure D also creates special contract conditions aimed at providing relief for the impact of COVID-19. These contract conditions relate to suspension, termination, extension of time, delay costs, and rise and fall.

Suspension

Contractors are entitled to claim for costs associated with suspensions directly related to COVID-19 if their capacity to comply with obligations and / or exercise rights under the contract has been impacted.

Termination

Annexure D inserts a new termination for convenience clause, which enables DTMR to terminate the contract at any time, without cause and in its absolute discretion.

In such circumstances, contractors will be entitled to payment of:

  1. the amount payable, had the contractor made a payment claim on the date of termination;
  2. the costs of materials, goods, equipment or other things reasonably ordered to carry out the WUC, subject to such materials, goods, equipment or other things becoming the principal’s property upon payment; and
  3. costs reasonably incurred for removing any temporary works and plant.

Contractors are also entitled to the return of security held by DTMR, subject to any deductions related to claims the principal has at the time of termination.

Extension of Time & Delay Costs

Annexure D further provides contractors with an express entitlement to extensions of time caused by a Pandemic Relief Event and associated delay costs.

However, if a contractor has an entitlement to claim delay costs related to a Pandemic Relief Event, this will be its sole and exclusive entitlement and it must claim in accordance with contractual EOT mechanism.

Submitting Annexure D Claims

When submitting Annexure D claims, contractors should ensure they provide a breakdown of the calculations for relevant items, including:

  1. overheads;
  2. equipment;
  3. materials; and

This must be done in a clear and transparent manner by the contractor and provide supporting evidence for all calculations.

Contractors should consider whether the additional costs incurred in the compilation of such claim (which are over and above the reasonable overhead) can be referred to the contractual process for valuation.

Annexure D claims are further required to be shown separately as a distinct line in any payment claims submitted by contractors.

What this means for Contractors

Contractors seeking to rely on Annexure D as an avenue of relief should consider the availability of various contemporaneous records to support their claims.

Said records may include:

  1. daily / weekly / monthly on-site reports which include commentary surrounding COVID-19 related delays / impacts (i.e., staff absences resulting in delayed activities);
  2. correspondence advising the administrator of potential disruptions / delays due to COVID-19;
  3. records provided to the administrator in connection with COVID-19, including any information related to isolation requirements for employees and correspondence from suppliers regarding the procurement of materials / equipment;
  4. on-site attendance records / timesheets;
  5. any mitigation steps (i.e., COVID-19 Management Plans); and
  6. additional costs associated with the procurement and supply of COVID-19 related PPE (i.e., masks, hand sanitizer, extra cleaning, etc.).

Lamont Project & Construction Lawyers

We have the industry knowledge and experience to assist contractors in preparing Annexure D claims under TIC-CO contracts. If you have any questions about any matters raised in the above article 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 your specific circumstances.

Contact: Peter Lamont or Quinn Hironaka

Email: peter@lpclawyers.com or quinn@lpclawyers.com

Phone: (07) 3248 8500

Address: Suite 1, Level 1, 349 Coronation Drive, Milton Qld 4064

Postal Address: PO Box 1133, Milton Qld 4064