Should construction sites remain open?
At the time of writing (6 April 2020), significant numbers of construction sites are closed. Others however remain open.
Should sites remain open?
The Government has shown a reluctance to impose site closures on the industry. In his letter of 31 March, the Secretary of State for the Department of Business, Energy and Industrial Strategy paid tribute to those working within the industry, emphasising their contribution to critical infrastructure at this time (including new hospital facilities) and also to the broader economy. In short, the Government needs the industry to deliver facilities to deal with the pandemic, but also to keep the wheels of the economy turning.
Whilst the Government encourages ongoing activity where possible, contractors are understandably concerned about the potential risks to those travelling to and working on sites. Those in the broader supply chain face similar questions.
Industry guidance addressing how sites can remain open is evolving and the Government has endorsed the Site Operating Procedures (SOP) published by the Construction Industry Council. Whilst an updated version of the SOP was published on 2 April 2020, this was swiftly withdrawn following industry feedback. As at 6 April, version 1 of the SOP (published on 23 March) is the version industry should be complying with. This includes guidance that:
- non-essential physical works that requires close contact between workers should not be carried out;
- work requiring skin to skin contact should not be carried out;
- all other work should minimise contact between workers; and
- start and finish times should be staggered to reduce congestion and contact.
Consideration about whether a site should remain open needs to be given on a site-by-site basis. Whether work can continue (or restart) will depend upon whether the SOP can be met and the latest guidance from Public Health England followed.
Who should make a decision about closing site?
This should be a decision of the Principal Contractor under the CDM Regulations. It is the responsibility of the Principal Contractor to manage site activity from a health and safety perspective.
Clients should not instruct site closures as, in general, they are not best placed to make such a decision. The only exception is if the client is the Principal Contractor, in which case it needs to consider the SOP and Public Health England guidance in making a decision about whether to keep the site open.
If a client does instruct a main contactor to shut a site, they are likely to face claims for additional payment as well as extension of time. If the decision is made by the main contractor, claims are likely to be limited to those for extension of time.
If a site is closed/is closing
If a site is likely to close:
- the contractor should be asked to explain the basis on which the site has been/or will be closed and whether it considers any on-site activity is still possible, following the SOP and Public Health England guidance;
- site security issues should be resolved with the contractor;
- a written and photographic record of progress on site should be taken (in as much detail as practical) so the state of the works on site at, or close to, the date of site closure is clear;
- there should be an assessment of off-site materials/production and also design so the overall status of the works is understood;
- how can the works carried out since the last valuation date be valued? Is there a means of carrying out an interim valuation (even though the payment would not become due until the relevant due date)?; and
- there should be regular review calls with the contractor to understand the mitigation steps it is taking.
Once a site has closed the focus should shift to activities which can be tackled off site and:
- the contractor should be asked to prepare a plan for returning to full operations as efficiently as possible once industry guidance permits this. Consideration will need to be given to the likely lead in time for remobilising labour, noting that some people may be self-isolating or shielding vulnerable people and others may have returned overseas; and availability of materials – some suppliers are currently only providing materials for emergency repair and maintenance and critical infrastructure.
- the contractor and design team should work on clearing any desktop activities to enable completion of the project, including discharge of conditions;
- the contractor should be pressed to provide all missing paperwork – commissioning certificates , as-built drawings, health and safety file, collateral warranties and copy sub-contracts;
- the client-side project team should take the opportunity to ensure that their records are up to date;
- clients should consider the position under any loan agreement/agreement for lease and consider the best means of communicating with the counterparty; and
- the terms of insurance policies and loan agreements should be reviewed to understand the potential implications of a protracted suspension of work.
Who should make the decision about restarting work?
Decisions about restarting or ramping back up works should be made by the Principal Contractor as it is responsible for overall health and safety on site. Whilst the client should seek updates from the Principal Contractor, it should not instruct the Principal Contractor to recommence as, by doing so, it could assume liability for that decision.
What about contracts under negotiation?
Many clients are currently negotiating building contracts or engaging contractors under letters of intent or pre-construction services agreements. These clients should consider the question of when works can or should start on site. From a contractual perspective this includes thinking about trigger events for commencement of work and/or how to address dates of possession.