Open dialogue needed to avoid COVID-19 construction disputes

The potential for construction contract disputes has risen sharply in recent months with the true impact of the COVID-19 pandemic on such contracts starting to emerge – and could continue for some time to come, says Rebecca McNulty, counsel in Ogier’s Dispute Resolution team.

And the way to avoid costly, time-intensive legal action is for parties to collaborate and initiate an open dialogue at an early stage geared towards trying to discuss and reach agreement on the way forward, says Rebecca, who has worked with a number of clients whose building projects have been impacted by COVID-19 since lockdown.

Rebecca has seen tensions rise on all sides as restrictions and their impact have started to frustrate and delay contractors' productivity and ability to deliver contract obligations.

"There's a need to avoid getting into a full blown dispute if at all possible," said Rebecca. "Parties need to weigh up the time and cost of an adversarial approach, which can only serve to compound delays, against the cost saving and benefit of a collaborative approach to resolving disputes as they arise"

She explained: "We are seeing a fall out from COVID-19 not just because lockdown restrictions meant many construction sites needed to close or work with reduced staff but also because of uncertainty and delays in the supply chain. Add to that the possibility of further lockdowns should cases increase locally, and we predict that this disruption to projects could carry on for at least the next six months or longer".

"Construction projects provide fertile ground for potential disputes at the best of times," Rebecca added. "And the potential for such disputes has risen sharply in recent months with the performance and enforcement of contracts directly impacted by COVID-19."

Many issues arise in the course of construction contracts that need grappling with properly early on to avoid spiralling into bigger issues.  More often than not, a failure to properly manage 'bite-sized' issues or frustrations at the outset can lead to larger, multi-faceted, costly disputes further down the line, says Rebecca.

"An open and frank dialogue early on between the parties steered as a form of informal mediation/collaboration can quickly put an end to frustrations and disputes and lead the way for a successful more cost effective solution to any dispute that may arise, however big or small," she said.

Find out more in our At A Glance Guide to construction disputes arising from COVID-19