The construction industry has had to adapt to address the impact of COVID-19 on both programme and cost of delivery. This has led to careful examination of those provisions within the standard form contracts that entitle contractors to claim additional time and/or money.

The core clauses of the NEC4 engineering and construction contract contain a list of 21 compensation events, the occurrence of which entitle the contractor to claim both additional time and additional money. The secondary option clauses list five additional compensation events. By contrast, the JCT/SBCC design & build contract contains a list of 14 "Relevant Events", which entitle the contractor to claim an extension of time, but only five "Relevant Matters", which give an entitlement to direct loss and expense.

COVID-19 is widely accepted to be a force majeure and the 21 April amendment to The Health Protection (Coronavirus) (Restrictions) (Scotland) Regulations 2020 is an exercise of statutory power. Under JCT/SBCC both events are Relevant Events but not Relevant Matters. Yet under an NEC contract, an "act of prevention" and, if secondary option X2 is used, a change in law give an entitlement to time and money.

Contractors working under JCT/SBCC contracts are struggling to assert claims for direct loss/expense incurred during the pandemic. While some employers may be willing to negotiate monetary relief, others are following the contract to the letter, leaving the contractors to shoulder the financial burden.

While there is a plethora of new Relevant Event and Relevant Matter clauses dealing with COVID-19 that are being incorporated into contracts, it will be interesting to see whether, given recent events, contractors will still be willing to enter contracts that only allow them to claim time for the many and various "no-fault" events that delay projects - eg civil commotion, other force majeure events, industrial action etc.

In an industry where margins are already low and the effects of COVID-19 have been keenly felt –contractors may now baulk at bearing the financial risks associated with such events.

Contributor

Juliet Haldane

Legal Director