New Construction Policy Note issued for contracting authorities to manage availability of resources

If a contactor seeks relief from or waiver of their contractual obligations, the contracting authority should refer to the relevant terms and conditions and seek legal advice as need be to inform their decision. Contracting authorities should also re-examine their models for the design, procurement and delivery of their forward construction portfolio programme, the government said.

It is recommended that contracting authorities which have projects on or proceeding to site where contractors are reporting unprecedented difficulties with availability and affordability of materials, plant and potentially labour undertake the following actions in relation to the construction contract:

• examine the terms and conditions which apply if the contractor fails to deliver on time and to specified requirements.
• elicit clear evidence from the contractor of the reasons for delay and disruption to the project.
• evaluate requests for relief or waiver of time and/or financial consequences in relation to the standard of evidence and details of the cause of any issues as required by the contract.
• take legal advice as need be.

As well as considering matters of obligation and entitlement, contracting authorities should work closely with contractors to identify how risks to the delivery of projects adversely affected by resource constraints might be mitigated. Such discussions should be honest and open, with the following among the information needed from contractors to help contracting authorities understand and evaluate the situation:

• materials’ source and stocks and how requisitions and deliveries are prioritised.
• supply chain integrity and reliability including labour, plant and consumables.
• tender allowances for time and cost compared to current prime costs and lead times.
• tendered overhead costs and profit.

Discussions with contractors should take account of what is fair and reasonable in particular circumstances. Matters including but not limited to the following are for each contracting authority to consider on a project by project basis:

• application of the terms of the construction contract.
• relevance and reliability of information provided by the contractor.
• events which impact against the contractor’s ability to perform the contract but not considered or covered by the contract.

In order to reach mutually-satisfactory outcomes, either or both parties may wish to propose that engagement is built around a conflict avoidance philosophy. CPN 2/2021 has more details.

The full CPN is available here.