Contracts and Subcontracts: Requirements of Providing Notice of Delays
With multiple states adopting lockdown orders to combat the COVID-19 pandemic, construction projects are being impacted. Although many states, including Virginia, have considered the construction industry, construction material suppliers/retailers to be essential businesses that are not affected by lockdown or shelter in place orders, construction projects are being impacted, and COVID-19 lockdown related delays are all but inevitable. Recent reports suggest that the supply chains for construction materials have been impacted by COVID-19 lockdowns in multiple countries. See: https://archpaper.com/2020/03/coronavirus-construction-supply-chain/. Corona virus related lockdowns are resulting in closed factories, shipping delays, and unavailability of workers in both the factory and in the field. A recent AGC of America survey revealed that 28% of respondents have halted or delayed project work due to the COVID-19 pandemic.
With substantial delay related costs on the line, now is the time to carefully read your contracts and subcontracts. You must determine the requirements for providing notice of delays, particularly those in any way related to the COVID-19 pandemic and state or federal orders that impact the availability of labor, materials, equipment, administrative staff, inspection staff, or even cash flow. When providing notice of anticipated or current delays, it is better to be proactive rather than reactive. Know the timing and content of delay notices required by your contracts. Trade organizations like the Associated General Contractors of Virginia are providing guidance and recommendations concerning the preparation of generic notice of potential COVID-19 related delays. We are counseling clients concerning the preparation of project and contract specific delay notices. Once you have provided the initial notice, make sure you provide updates and supporting information concerning the nature and duration of the delay, and the costs resulting from the delay.
Stay safe and healthy.