Likely Effects of COVID-19 on Construction Projects

Likely Effects of COVID-19 on Construction Projects


Bruce D. Partington
 is a Shareholder and member of the firm’s general litigation department. Board Certified in Construction Law since 2005, Bruce’s practice is largely devoted to this area as well as other commercial, real property, and insurance litigation.

PENSACOLA (March 24, 2020) – 

The COVID-19 Pandemic is absolutely going to have substantial effects for ongoing and not-yet-begun construction projects. The most foreseeable effects at this point are possible delays from labor or material shortages, crew size limitations, or other physical distancing requirements, and increases, or perhaps even decreases, in costs. Additional effects may be tightening of lender loan draws and additional worksite health and safety requirements—imposed voluntarily or involuntarily.

For current ongoing projects, the coronavirus effects will almost certainly qualify as force majeure equating to, under most contracts, excusable but non-compensable delays. Cost changes (up or down) may or may not be recoverable under a given contract, depending on how it’s written. After the sheet-rock shortage and spate of hurricanes over the last decade or so, clauses permitting price adjustments are more common than they were before. Cost adjustments under force majeure clauses may also be possible.

Another issue that might come up for ongoing projects is suspension or termination for convenience. These options are entirely governed by the parties’ contract, so parties should review those options under active contracts so that everyone understands how the clause works.

For projects that have not yet begun, the best course would be to modify the contract to deal explicitly with these issues and avoid disputes later. We have been working on suggested contract provisions to account for this, and are happy to discuss options with you. In general, our view is that the best course is to seek a path that is fair to both parties and in the best reasonable interests of the project overall (which does not mean the best interests of just one party). For example, for cost adjustments (up or down), there are a variety of ways this can be handled, including having percentage thresholds for either trades or overall, and dealing with issues like overhead and profit adjustments on cost adjustments or delays. If the parties find a path to share the burdens, and even the potential benefits of the situation equitably, the project is more likely to succeed overall rather than falling apart.

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Clark Partington’s construction team is equipped to answer questions related to your specific situation. With offices in Pensacola, Destin, Santa Rosa Beach, Tallahassee, and Orange Beach (Alabama), we are a full-service firm, serving the Gulf Coast.  To reach one of Clark Partington’s construction attorneys, contact Bruce Partington at (850) 432-1399 or bpartington@clarkpartington.com.

About Clark Partington:

Clark Partington is the largest business focused firm in the Florida panhandle with offices in Pensacola, Destin, Grayton Beach & Tallahassee.  The firm also maintains a presence in South Alabama with an Orange Beach office.  Since 1976 Clark Partington has grown to over forty lawyers and has served the people and businesses of Florida through an innovative and collaborative approach to practicing law.  Our lawyers are consistently recognized for their service to the profession and excellence in the courtroom.  More information about the firm’s practice, its attorneys, and recognitions may be found at www.clarkpartington.com.