Not surprisingly in the context of Covid-19, and with Brexit imminent, there is now a greater focus on who bears the risk of delay. In the case of Covid-19 it is all about staffing and site-access; in the case of Brexit it will be a range of issues.
The main areas of concern are
• the impact of changes in law and regulatory changes;
• the imposition of tariffs;
• exchange rate movements or other expenses relating to procuring labour, goods and materials; and
• the ability of the contractor to procure labour, goods and materials in time.
Where one of these ‘Brexit events’ occurs, contractors expect the employer to bear the risk of delay to the works and any financial loss that flows from it. Failing that, they at least expect to see the risk shared between them (i.e. the contractor is allowed more time but not additional costs).
In the recent low inflation economy, building contracts have tended to be on a fixed price basis. With the uncertain impact of Brexit looming, contractors are seeking to guard against increased risk. One way of doing so is to agree a specific list of items / materials sourced from Europe (with anticipated supply periods) and provide for suitable price adjustment in respect of them.
Where specialist materials or artisanal labour are being sourced from Europe, more advanced planning is required in respect of lead in periods for orders, with early identification where possible of potential shortages, particularly in relation to labour.
With the strong possibility of ‘no deal’, advanced identification of risk, planning for it, and addressing it in the contractual documentation is clearly very important.