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Coronavirus Confusion in the Construction Sector

09 April 2020

Further to the First Minister’s statement on 23 March 2020, that all Scottish construction sites not delivering an essential building (such as a hospital) should close, in the face of earlier advice from the UK Government to the contrary, there has been widespread confusion within the industry as to whether sites should be closing or not, and who will bear the time and costs consequences of doing so.

On Monday 6 April 2020, the Scottish Government issued much awaited further direction in the form of the “Coronavirus (COVID-19): construction sector guidance”. It can be found here. The guidance states: “The construction sector and its supply chain is considered a non-essential business sector, except where supporting an essential sector”. There are 13 essential sectors, designated Critical National Infrastructure (CNI) sectors, in which construction work may continue to a limited extent (“keep open only those premises or parts of premises that are truly critical or essential to the national COVID-19 effort”). The 13 CNI sectors are those essential to the “facilities, systems, sites and networks” upon which Scotland depends. Amongst those 13 CNI sectors are health, energy, communications, transport, finance, food, water and waste and, of course, the emergency services.

Fraser Hopkins
Fraser Hopkins, Partner 

Jilly Petrie
Jilly Petrie, Partner

The guidance also identifies non-essential construction work in 12 sectors that “should be halted at this stage”. These include domestic housing, offices, commercial property, leisure and retail.

Essential construction work is stated to relate to the immediate response to COVID-19 such as the field-hospital being constructed at the SEC, or other works that are concerned with the provision of “testing, containment, treatment, research, vaccine production, protective equipment manufacture, other key medical supplies, and other related activity, including supply chains” as part of the response to COVID-19.

As with most national measures introduced in recent times, the guidance is effective immediately, extends until further notice, and is subject to three-weekly review.

Accordingly, since 6 April, the suspension of works on many more sites has been announced. Our experience has been that many housebuilders and contractors had already announced closure of their sites and the rest will undoubtedly now swiftly follow. The guidance states that operations should be shut down safely, made wind and water tight where possible, and suitably secured. An exception to immediate shut down is made for those sites which can be safely completed within 5 working days.

There may well remain a debate between contractors and employers as to who carries the time and cost risks of temporary site closures instigated on the back of the new guidance. That is likely to be fuelled by the fact that the Scottish Government has produced ‘guidance’ only as opposed to primary or secondary legislation that obliges all non-essential works on building sites to stop. While the guidance might be seen as best practice, we expect to see arguments about whether site closures became mandatory or not in light of the guidance. As usual, the answer will likely lie in the express terms of the building contract and whether recent events trigger clauses dealing with extension of time and additional payment.

Meantime, it is business as usual for BTO’s Construction team who are available to assist. For any questions you may have, please contact:

Fraser Hopkins, Partner, E: fho@bto.co.uk / T: 0141 225 4858

Jilly Petrie, Partner, E: jpe@bto.co.uk T: 0141 225 5302

 

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