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How COVID-19 is Affecting Contractors

While the severity of the COVID 19 outbreak’s impact on the construction industry is speculative, we anticipate contractors will experience one or more of the following:

  • Supply chain disruptions
  • Labor disruption – Worker illnesses that may result in projects being shut down or delayed as workers are forced to self-quarantine or are simply unwilling to work
  • Schedule delays and increased project costs
  • Governmental Disruption and/or intervention
  • Potential Suspension of Work and/or Termination for Convenience declarations by Owners on existing contracts
  • Bids being postponed
  • Delays in awarding and/or starting new work
  • Potential project funding issues by both private and public owners

Recommendations:

  • Consult with your Guy Hurley advisor in planning and implementation of a COVID-19 plan”
  • Review all existing contracts and potential new contracts carefully. Pay close attention to clauses relating to Force Majeure, Termination, Suspension, Owner Funding, and/or Change Orders in the Contracts.  Determine responsibilities and rights as respect to these clauses.  This language may control the outcome of any potential claims against a contractor by the Owner and/or subcontractors and suppliers (read subcontracts too), as well as potential counter claims and remedies against these parties 
  • Carefully document events, costs, disruptions, inefficiencies and schedule impacts to better pursue any claims/positions that might be asserted by you in the future
  • Meet and confer regularly with owners, engineers and general contractors regarding project needs, challenges and potential solutions

o   Possible remedies for Contractors in the event of project delay and/or disruption may include additional time and, possibly additional compensation

  • Put owners on notice immediately.  Even if there are not any known impacts today, we recommend Contractors provide the Owner with written notice that the World Health Organization identified the COVID-19 outbreak as a pandemic on March 11th.   This event could result in potential delays and additional costs that are outside the Contractor’s control.  Then as the impacts become better known, you will be able to document the details in your claim