#Covid19, Construction and Lockdown – how are these living together?

equalityThe South African construction industry is one of the sectors which is severely affected not only by a national lockdown but also by other unforeseen situations related to prevailing conditions that may be associated with the COVID-19 pandemic. Most construction projects have become under threat within a short period resulting in unexpected delays, disruptions and additional costs, as caused by the COVID-19 pandemic.

 

This article will focus on delays in larger projects.

 

As set out by the South African Institution of Civil Engineering (“SAICE”)[1] there are three stages or scenarios to consider:

 

SCENARIO 1: Before Lockdown

 

This scenario applies specifically to only the period before Lockdown.

 

During this time, a Contractor (or Subcontractor) may have experienced a loss of resources (labour) through no fault of his own. This was attributable to the COVID-19 pandemic before any legislation was promulgated under the Disaster Management Act 57 of 2002.

 

It may also be a case where there is a delay, or additional costs are incurred due to a delay in the manufacturing, supply and delivery of materials or plant to the Site.

 

SCENARIO 2: During Lockdown

 

This scenario applies separately to:

  • the original Lockdown period; and
  • each subsequent lockdown

 

SCENARIO 3: After Lockdown

 

This scenario applies separately to:

  • the period after the original lockdown period; and
  • each separate period after each of multiple lockdown periods after the initial lockdown period.

 

Suspension of Works

 

As a point of departure, under the SAICE suite of contracts, suspension of the Works by the Contractor is only permissible if the Contractor has not been issued a payment certificate or full payment has not been made to the Contractor for a certified payment certificate.

 

Ultimately, suspension delays the conclusion of the Works.

SCENARIO 1: Before Lockdown

 

If the Employer’s Agent instructs the Contractor to suspend the Works, the Contractor may make a claim and remains subject to compliance with the claims procedure set out in the Agreement.

SCENARIO 2: During Lockdown

 

There is no need for the Employer’s Agent to issue written order for the suspension to the Contractor to suspend the Works. However, in the event that the Employer’s Agent did issue a written order for suspension, the Contractor is obliged to comply with such order (or instruction) and may claim.

If a decimated workforce (which is not limited to the workforce of the Contractor but also include that of its Subcontractors or Suppliers) causes the Contractor to suffer delay to Practical Completion and/or brings about proven additional costs, the Contractor is most likely to be entitled to succeed with a claim under the Agreement.

 

SCENARIO 3: After Lockdown

 

Where the Employer’s Agent instructs the Contractor to suspend the Works, however, should the Employer’s Agent instruct the Contractor to suspend the the Works, the Contractor may make a claim.

 

If a decimated workforce (which is not limited to the workforce of the Contractor but also include that of its Subcontractors or Suppliers. If the Contractor is to suffer delay to Practical Completion and/or brings about proven additional costs, the Contractor is most likely to be entitled to succeed in making a claim.

 

Conclusion

 

In regards to delay and suspension of works, it is critical to follow the procedure correctly. Contact SchoemanLaw for your Construction legal needs or assistance.

 

[1] https://saice.org.za/wp-content/uploads/2020/04/COVID-19-and-SAICE-GCC-contracts-Notice-dated-1-April-2020-1.pdf : accessed 20 June 2020

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