re:build Britain - delay and disruption What the construction sector can do to rebuild and get better prepared to tackle the challenges in 2021

We’ve never used the words delay and disruption as much as we have in 2020, with contractors and employers having faced significant challenges in navigating project delivery and new working practices. Despite the challenges, it’s been incredible to see how well the construction sector has adapted. Improved collaboration, creative action, hard work and determination have seen projects begin to recover and productivity increase, and have put many in a better place to reset and rebuild on the path to recovery. The pandemic has amplified concerns over Brexit and how it will impact the skills shortage, supply of materials, regulations and standards. As we continue to support businesses in the sector and help them to prepare for the year and its legal and regulatory challenges, it’s clear that commercial tensions are high and that pent-up disputes are one of the biggest issues on the horizon. But while 2021 comes with new challenges for the sector, there are practical steps that can be taken to minimise risk and better prepare for likely delay and disruption. womblebonddickinson.com Simon Rowland Partner and Head of Construction [email protected] Delay and disruption What’s the difference? Construction delays are considered as being the time lag in completion of activities from their specified time for completion in a contract, or can be defined as late completion or late start of activities against the baseline schedule, directly affecting the programme (and potentially impacting on project cost). Construction disruption is where a disturbance, hindrance or interruption to a contractor’s normal working methods results in lower efficiency. Disruption claims often relate to loss of productivity in the execution of particular activities. Because of the disruption, these work activities cannot be carried out as efficiently as reasonably planned (or as possible). womblebonddickinson.com Delay and disruption Avoiding and managing disputes womblebonddickinson.com With pent-up disputes waiting to be resolved, it’s key to get on the front foot and assess the likely risks to your project, working with your team to understand where you may be vulnerable and making sure you have plans in place to take the right actions. womblebonddickinson.com Getting on the front foot in 2021: • Explore all of the potential risks to your business from all external factors, including labour and materials shortages, and scenario plan – how will you overcome the issues to avoid delays or to document and record potential disruption? • Take time out to review your contracts. Whilst your existing contracts were unlikely to have included specifics around a pandemic, what’s best practice going forward and which current contracts pose the biggest risks with regard to delay or disruption? • As a developer or employer, focus on good project and contract management, particularly around notices and agreed project plans – where are your biggest risks? • Consider taking a more collaborative approach to future/new contracts. With so much uncertainty it may be prudent to accept and share risk more evenly when drawing up contracts. Simon Lewis Partner [email protected] Records, records, records It’s not just about diligently maintaining thorough records; it’s about keeping the right records and how you gather and collate the information. If disruption is causing delays out of your control, it’s important that you can prove it and that concerns are raised at the right time. When disputes arise, legal teams need to be able to assess how the delay to a project has occurred, the steps taken to avoid delay, the steps taken to record and report delay, and how works have progressed. womblebonddickinson.com Jessica Tresham Partner [email protected] If programmes are not regularly updated and records not sufficiently thorough then it can create further uncertainty as to whether other action or other methods, could have avoided delays. • Parties should look to agree on the type of records to be kept, as well as the frequency of updates to those records. This agreement would simplify and assist in resolving claims. • Collate evidence – make sure disruption and delays are documented daily as they occur, with all activity which is hindered recorded individually and contemporaneously. • Measure impact – maintain records on how the project is/could be impacted at each stage. To do this you will need to show how the works were planned to be undertaken as against how they now need to be undertaken as well as mitigation measures considered and/or implemented. This may include changes to the scope, specification, sequencing or method of carrying out the works, increases/decreases of activities/resources (being labour, plant and/or materials), preliminaries, head office costs etc. Short simple narratives should be used to explain the effects. • Send records to all agreed parties in real time. • Confirm receipt and check whether the records are sufficient. When disputes do arise, it’s in everyone’s interests to reach a resolution as quickly and efficiently as possible. Keeping impeccable records will reduce wasted time and keep legal costs down. Hannah Gardiner Associate [email protected] Jessica Tresham Partner [email protected] womblebonddickinson.com Project Managers or Contract Administrators Work with your team to make sure records are then analysed and include everything that’s needed to avoid dispute. • Apply relevant provisions of the construction contract. • Make a logical and methodical analysis of the effect of any risks to the programme. • Conduct a calculation of the relevant critical delay, rather than an impressionistic or general assessment. Typical records might include: womblebonddickinson.com • Progress meeting and general meeting reports • Programme progress updates • Marked up drawings • Correspondence • Labour allocation sheets • Daily work area records and daily site diaries • Quality control inspection sheets • Handover records • Weather and conditions records • Progress photographs Avoiding disputes The biggest challenges 1. Shortage of materials Imports Just over 60% of materials used in UK construction projects are imported from the EU, and with congestion at UK ports already causing serious delays, concerns are running high. Covid-related import delays, new operating procedures to maintain safety, and a 30% increase in freight and storage of PPE are just some of the issues which are causing some unloading times to increase by a number of weeks. The industry is raising serious questions as to the readiness of ports and how this will practically impact the availability of materials post-Brexit, as well as their cost. Another Brexit-related challenge is the tariff charges that may come with the import and export of materials. With margins already tight, this is likely to have a significant impact. With particular concern over white goods for homebuilders, plumbing items, ironmongery, tools, natural stone, and more, what can you do to get your business as prepared as possible? Practical steps • Stay on top of the latest guidance from the Government and make any necessary changes regarding importing goods as soon as possible • Take time to understand how the changes could impact current or future projects, in terms of cash flow, project timeframes, quality, profit margins and contracts • Review your supplier pool and consider if you may need to source alternative or additional suppliers.