Whilst the effect of the Greater Sydney and Adelaide construction shutdown is immediate and profound, the lasting impacts on each project will of course depend on a range of factors which will come to light in the coming days and weeks, for example:
- Duration of the shutdown;
- Effect on supply chains (eg delivery uncertainty / manufacture pauses / storage costs / transport re-scheduling / supplier re-prioritisation of Sydney and Adelaide projects);
- Effect of any staged or partial re-opening strategies (eg productivity impacts and resource reallocation if certain projects are prioritised);
- Acceleration costs for projects striving for predetermined “hard” completion dates;
Our current recommendations for affected projects:
1. Establish and agree the basis for contractual entitlement for recovery of cost and time applicable to the current situation;
2. Understand contractual time periods for notification of events giving rise to delay and cost – these should be adhered to for the benefit of all parties, notwithstanding the unprecedented nature of this event.
1. Review the requirements of the Contract regarding delay:
- Notice of Delay clauses
- Extension of Time clauses – their operation, and obligations of the parties;
- Ongoing notice provisions
2. Establish the status of the works (and the true critical path) at the commencement of the delay;
3. Continue to update the status of the works regularly throughout the delay – considering the full scope of the work under the Contract, including all off-site activities;
4. Start to consider the effect of any work that may be required relating to re-start of the work (site re-establishment);
5. Commence planning to minimise the impact of lost time – consider mitigation obligations, as distinct from acceleration proposals or instructions.
1. Quantify and record actual costs related to the shutdown as they occur, for example:
- Demobilisation costs;
- Site protection / security;
- Additional storage costs
Ideally isolated from other costs so they can be readily identified.
2. Start to consider:
- The cost of any work that may be required relating to re-start of the work (site re-establishment);
- Costs arising from lost productivity during ramp-up;
- The cost of any acceleration under consideration.
We will update our advice as the situation unfolds.
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