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Four-point Plan Spotlight: Security of Payment – during COVID-19

As government measures to mitigate the spread of COVID-19 intensify, the construction industry is coming under pressure to react, creating more uncertainty for projects and contracts.

In our previous article Four-point Plan for Time and Cost Recovery we considered some simple but effective guidelines, which if introduced, would be invaluable in successfully establishing a position in regard to progress, amounts due and any delay or disruption.

These were:

1. Establish where your project is up to NOW

2. Establish and record the impact of doing nothing

3. Identify and Record the Cost and Impact of recovery measures

4. Ongoing Record-Keeping

This article can be found at tbhconsultancy.com/news

Following on from this, one of the most critical issues facing the industry and Contractors, Sub-Contractors and Suppliers especially, will be the question of cashflow.

Given the unprecedented nature and scale of the challenges the construction industry faces due to the current situation and the pressure on cashflow, it is highly likely in our opinion that this will lead to a significant increase in applications under the various state Security of Payment regimes.

Taking into consideration the restricted timeframes both in submission and response to SOPA applications, this further reinforces our previous advice in respect of proactive gathering of quality project records to put you on the front foot in managing and effectively progressing these situations.

In addition to the potential for increase in SOPA claims, situations may present themselves whereby businesses could possibly utilise the current uncertainty in operational practices to improve cashflow in more opportunistic ways, for example, by serving applications for payment and/or SOP at offices that may have become unmanned and seeking to take advantage of a missed/late payment schedule to benefit from an “easy win” adjudication.

To avoid these situations arising, businesses could consider the following steps:

  • Make certain there is a reliable means of picking up and distributing hard copy post from offices that may have become largely vacant (e.g., tasking an employee to deal with mail or redirecting the post to a manned address)..
  • Ensure correspondence is being copied to more than one individual capable of actioning it.
  • If the contract allows, consider requiring all notices to be served by email to prescribed addresses, or to amend the contracts address for service.

If you have any questions or concerns about your projects in light of COVID-19, please contact your local TBH office here.

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