Contractors urged to review contracts

The Building Engineering Services Association (BESA) has advised contractors to review their contracts so supply chains can work together to manage inevitable delays to projects during the coronavirus crisis.

Contractors urged to review contracts

Debbie Petford

Many sites are being shut down in response to government calls for non-essential work to be paused and the Association praised the way firms were working together to manage this unprecedented interruption to business.

BESA’s legal and commercial director, Debbie Petford, said firms should confirm the correct method for notifying delays under the terms of their contract. She added that many contractors were now entering into deeds of suspension with their clients where both parties agree to suspend their obligations and work out how to apportion risk.

“This is a really sensible approach,” she told BESA’s daily COVID-19 update webinar. “There is no one-size-fits-all remedy here, but if you contact my department at BESA we will be happy to advise you.”

There have been some reports of sub-contractors facing threats of fines and penalties if they don’t turn up for work and BESA chief executive David Frise called for that to stop.

“We are bound to see some examples of bad behaviour, but overwhelmingly we are seeing the best of people during this crisis,” he said. “Supply chains are working together to get through it and to ensure that projects can quickly get back up to speed when the crisis is over.”

Some workers said they were facing social media shaming for travelling to work despite the government’s instruction that essential sites should remain open – and many are supporting critical building and infrastructure projects. BESA is working with the umbrella body BuildUK to ensure the general public is more aware of why certain workers are still travelling.

However, a large number of contractors now report that around 75% of their work is now suspended with others saying they expect to be fully shut down by the end of the week. This raises the question of how companies can access business interruption loans with many concerned they were being asked by some of the banks to supply security that could put them at future financial risk.

Chancellor Rishi Sunak confirmed that the UK Government was supporting interest-free loans of up to £5m for 12 months to help see firms through the crisis, with banks covered for up to 80% of the losses if the businesses are unable to repay.

However, it has been reported that some banks are intending to charge interest on the loans and requesting personal guarantees from business owners. Ms Petford advised BESA members not to give personal guarantees that could put their assets at risk if there was a problem with repaying the loan.

She said banks were not allowed to use someone’s main residence as security, but may ask for stocks and shares.

The webinar also heard from BSS commercial director Sue Greatorex, who said initial confusion around supply of materials had been cleared up with her organisation receiving a letter of authority from the government allowing them to keep supplying to essential sites and services.

BSS had closed down all its branches earlier this week, but had been given permission to re-open and she said materials were now getting through to priority sites. Greater restrictions were in place with delivery workers having to maintain safe distancing, but the system was now working.

Deliveries no longer have to be signed for and many are taking place via kerbside phone and collect methods. Some delivery drivers are being stopped by the police and so must carry details that prove they are delivering to key sites. She asked customers to be clear about this in their orders so the relevant evidence was available.

Ms Greatorex also explained that all BSS support staff were working from home so were available to answer customer queries.

  • Read all of our articles relating to COVID-19 here.
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