Top 5 things to do to protect your Building and Construction business during the Covid-19 lockdown period

As you know, the latest round of Health Orders have closed construction sites in the Greater Sydney Area.

Importantly, there are exemptions, which allow work:

  • necessary to deal with environmental risks, secure the site or maintain critical equipment;
  • to receive deliveries of supplies that would otherwise deteriorate;
  • to maintain public utilities, including public areas such as parks, etc; 
  • necessary to maintain the safe operation of transport infrastructure;
  • a construction site necessary for NSW Health in response to the COVID-19 pandemic; and
  • that is required as a result of an emergency (such as urgent repairs).

This means you can work to properly secure any of your sites (eg. to ensure everything is braced, secure and watertight) but you can’t undertake general building and construction work. When doing this work, don’t forget to ensure that all workers are wearing a mask and are registered on site.

Following this we suggest that you turn your mind to your contracts and check for the following clauses.

1. Extensions of time

Most contracts require EOT to be notified within set time periods, and when the contractor becomes aware of the delay. That means you should be giving a notice of delay to the owner or head contractor and applying for an associated extension of time for practical completion. Don’t forget to also factor in any time that it’ll take to get the site back up and running.

2. Capacity to Pay

A large number of people are affected by the recent Health Orders, which may include your clients. Does your contract allow you to request evidence of their capacity to pay, or pay a deposit for certain works? Most standard form residential contracts do so you may want to check that out.

3. Price adjustment

The latest Health Orders may trigger the need for additional works. For example, the work required to secure the site and make it safe for the period of the lockdown, additional hire costs, additional security, storage costs for materials that have been or are scheduled for delivery and the purchase of personal protective equipment. It’s possible that there may also be works partly undertaken, or materials, that will deteriorate and which may need to be redone.

This additional work may give rise to a right for an automatic contract price adjustment, which can be included within the next progress payment. Be sure to do your calculations, familiarise yourself with your obligations to notify the Owner or Head Contractor of these costs, and keep evidence of any additional costs incurred.

4. Variation clauses

If your contract doesn’t include provision for contract price adjustment, consider whether you should apply for a Variation the scope of the contract works. Most standard form contracts restrict a property owner from refusing variations for works which are required to comply with the law. Don’t forget, for all residential building works under the Home Building Act 1989 any and all variations must be in writing and signed by both parties to be enforceable.

5. Standard Terms

And finally, check the terms of any hire agreements or dockets for hired equipment. Can you off-hire or suspend the hire agreement? If not, you may be able to claim a contract price adjustment or variation in your contract (see above).

Now is the time to review and familiarise yourself with your building and constructions contracts, and ensure you act to maximise your protection and minimise your loss. If you need assistance, contact our lawyers at Lodestar Legal.

66 thoughts on “Top 5 things to do to protect your Building and Construction business during the Covid-19 lockdown period”

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