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Construction Contract Challenges Contractors Need to Consider During COVID-19

The COVID-19 pandemic has proven to be highly unprecedented and has had adverse effects on all business sectors, including the construction industry. Safety measures like lockdowns, social distancing, quarantine, and prevention measures have made it impossible for construction projects to finish on time.

Delays are very common in the construction sector, but the current situation has made it more challenging for businesses to keep up with the work and time frame. This has created numerous construction challenges for the contractors as they are navigating their way through this new normal and trying to protect their payments and contracts.

Construction Challenges Contractor Must Consider During Covid-19

The most common question we have heard over the past few months is: what are the most prominent contract issues that the construction businesses are facing, and how can they navigate through this crisis? If you are also wondering about this, then here are the most common construction challenges that the contractor must consider from now on during the pandemic.

Supply Chain Disruptions

China makes up one-third of the global manufacturing, and since the outbreak of the pandemic, the world is experiencing supply chain disruptions. These delays in the construction material supply have impacted a lot of jobs due to a shortage of materials and an increase in prices. Thus, most construction companies struggle to keep up with the growing demand as the global supply chain remains disrupted.

These adverse circumstances have led to construction delays and even contract cancellation with suppliers as companies are barely able to fund their employees and keep the laborers and the crew paid. While the pandemic will eventually end at some point, companies need to navigate through these supply chain issues as soon as possible and look for alternatives.

Essential and Nonessential Businesses

Another significant construction challenge that businesses and contractors are facing is whether construction work is essential or nonessential? The definition and conditions of essential business are ever-changing pertaining to the current pandemic, which has created many problems for the contractors.

In some states and Emirates, construction is regarded as essential, allowing businesses to continue their work on construction projects while adopting safety measures at worksites. On the other hand, there are states and emirates in which construction comes under nonessential business, thus requiring a complete shutdown until further notices.

This has rendered contractors to meet deadlines and complete projects on time leading to delays and construction disputes that are hard to resolve. Therefore, to know more about your local state and emirate laws, consider approaching construction claims consultants in Dubai UAE, to avoid expensive litigation and dispute resolution.

COVID-19 and Force Majeure

When the pandemic started in early 2020, one of the main considerations and a puzzle was, “Is COVID-19 a Force Majeure Event?” A force majeure clause “relieves one party from performing contractual obligations under certain circumstances that would make performance impossible, impractical, and even illegal.”

Therefore, contractors and construction businesses can protect themselves from disputes and protect their payment through a force majeure clause. Be very cautious about this clause because the extent of protection will depend upon the exact wording on your contract. As COVID-19 has resulted in “non-performance due to events and circumstances beyond your control,” thus, it is a force majeure event.

Dealing with Construction Delays and Claims

Another important challenge that construction companies need to deal with is various contract conflicts that arise from delays and claims in construction work due to the pandemic and cancellation. According to some experts, the current COVID-19 epidemic could last up to two years. It means that you could be experiencing such delays and contract conflicts for some time now.

Hence, the only way forward is to contact construction claims consultants in Dubai, such as Fractal Expert Services, and work your way around these conflicts, so they end up in your favor. You might not know this, but there are clauses in your contract that can protect you from disputes because they accommodate delays due to causes that are out of human control. These experts can help you utilize these clauses in any situation to mitigate the risk.

Ensure there is open negotiation among all the parties to help both contractors and clients solve their problems efficiently. Exiting a contract or cancellation shouldn’t be your first option unless the circumstances are dire.

Adjusting to the Post-COVID-19 World!

The ongoing pandemic has significantly disrupted the construction industry landscape across the world. Local governments’ implementation of safety measures, including travel bans, lockdowns, and cancellation of large-scale work in attempts to contain the virus, have disrupted work in a lot of industries, including construction. Every business must now learn to navigate through this crisis.

It may be some time before COVID-19 is entirely in the past, so it’s up to construction business owners and contractors to determine how to manage and maneuver around these construction challenges and move forward.


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