Pandemic Protection: Allocating Risk in Construction Contracts Through the Uncertainty of COVID-19

In an article published online in Construction Executive, Partner Steven Gonzalez discusses how stakeholders in the construction industry can protect themselves from further fallout due to COVID-19, as well as the next possible wave of shutdowns and disruptions.

“The best times to protect against the adverse impacts of a force majeure event, such as a pandemic, are during the financing and contracting portions of upcoming projects,” explains Gonzalez. “With these growing concerns, force majeure provisions in contracts have been expanded greatly to include not only the pandemic itself, but also the resulting impacts including, but not limited to, labor strikes, project shutdowns due to employees testing positive, Center for Disease Control and OSHA requirements, blockades, or other government imposed restrictions on materials and equipment from foreign countries.”

Gonzalez further explains prudential provisions that should be included in contracts to mitigate risk, including force majeure, change order, and scheduling and liquidated damages provisions.

“All in all, the best advice is to have candid discussions with all involved early and take all steps reasonably and fiscally possible to protect the project and respective businesses from the possible impacts of a pandemic,” Gonzalez concludes. “The more direct the discussions that are had prior to the contracts being entered into and project commenced are, the easier it will be to resolve claims in the event of a pandemic-caused delay.”

For the full article, you may click here.