Where will the construction industry be in 6 months?

Graeme Cochrane, Construction Director at bid and construction law specialists, BWL Consulting, shares his thoughts on the current state of play of the industry and how we should expect this to change during the upcoming months.

One positive outcome from Covid-19, is witnessing the construction industry's compassionate response to the crisis. So far, it seems the majority of businesses have taken a ‘we’re all in this together’ approach, putting the common good of the industry first, rather than any individual business needs.

Rather than seeing an influx of contracts negotiations and disputes, or contractors being pursued to pick up the costs from delayed projects, we’re seeing construction companies showing a compassionate level of understanding for the situation.

In an ideal world, this would continue long after social isolation ends. Once normal life has returned however, we anticipate that the most likely scenario is that many businesses will be left wondering, who’s going to pay for this?

Understanding the impact

We estimate that in the next 6-12 months, as projects are finally delivered and the true cost of the coronavirus impact is established, companies will begin the processes of seeking to recuperate some of their losses. The impact? Legal battles with clients and contractors, subcontractors forced to take some of the financial brunt, and a realisation that the government-offered help isn’t going to cover nearly as much as originally thought. Not to mention the likely outcome that many of the industry’s contractors, subcontractors and suppliers will have gone bust in the process – which will have a prolonged impact on an industry that is already stretched.

So what can we do?

Whether you’re a client, a contractor, subcontractor or supplier, now is the time to plan for this uncertain period and get yourself familiar with the current legalities around the situation and specifically what is written in your own contracts, whilst keeping an eye out for any legislation changes in the next year which may impact you or your business. We’ve written a useful guide for contractual advice around a pandemic, which we’ll be keeping updating.