From designers to demolition experts and cost managers to contractors, the effects of Covid have been felt by all and will continue to be felt for a long time.
As a result, many businesses that provide advisory services, including my own, were predicting an uptick in disputes heading towards the end of 2020, as temporary protections expired and the full extent of delays and expenses resulting from months of repeated lockdowns, government orders, reluctance by contractors to report to ongoing projects and disruption of supply chains started to be revealed on all sides.
Sensing trouble on the horizon as the material impacts of the virus on contracts made themselves known, earlier in the year the Cabinet Office issued guidance to the construction sector. The government urged “responsible and fair behaviour” and encouraged us to cooperate if we wanted the industry to get out of this alive.
For adjudicators tied up with high-value, multi-faceted disputes characterised by complex procedures, it seems unlikely this ‘softly-softly’ approach will be applicable.
However, in the case of slightly lower-value models where flexibility has always been key, perhaps it has a place. It is here we expect to see the predicted rise in disputes come to fruition. Not necessarily on the same scale as seen in the wake of the collapse of Carillion, but with almost 4,500 construction businesses reportedly falling into significant financial distress in the third quarter of 2020, there will inevitably be legal fallout.
According to an Arcadis report, a trend had been emerging for spending more time mitigating disputes than focusing on the resolution stage. With the financial cost of legal clashes in the construction industry measured in billions of pounds, embedding mechanisms by which conflict can be avoided at ground level should be encouraged. Certainly, the considerable number of businesses signed up to the RICS Conflict Avoidance Pledge seem to think so.
But, while prevention is of course better than cure, only time will tell us whether the pressures imposed by Covid have sapped any trace of goodwill from the supply chain and curbed all parties’ appetites for compromise.
Richard Steer is chairman of Gleeds Worldwide