Building and construction: What the COVID-19 lockdown means for you

From 11.59pm on Wednesday 25 March, New Zealand will be at ‘Alert Level 4’ of the country’s pandemic response plan seeking to limit the spread of COVID-19. Only ‘essential services’ will remain open and operational for the next 4 weeks, at least.

Many in the construction industry have prepared their workplace for a potential lockdown. But what does the lockdown mean for construction projects? While the impact of, and guidance on, the lockdown is evolving, we set out our current thoughts on two key issues you may be considering:

What is an ‘essential service’ in the building and construction sector?

The current, public information is the following entities are considered ‘essential’ and can continue work:

  • any entity involved in building and construction related to essential services and critical infrastructure
  • any entity involved in building and construction required immediately to maintain human health and safety at home or work
  • any entity that performs or is involved in building and resource consenting necessary for the above purposes

For most projects – this is a clear requirement for sites to be secured and shutdown.

We can, however, expect to see further guidance on these aspects issued by the Ministry of Business, Innovation and Employment (MBIE) (as lead agency for the building and construction sector).

While building and construction related to essential services and critical infrastructure is relatively clear, it will be interesting to understand from MBIE the extent to which building and construction works can continue in order to maintain human health and safety. Contractors and subcontractors may have beyond 11.59pm on Wednesday 25 March to secure their sites and continue to ensure that they are safe – to the extent that links to human health and safety.

What about claims for extension of time and additional cost?

Whether you’re a principal, contractor, consultant or subcontractor, you should be considering what the time and cost implications of the lockdown are, and what steps you need to take to protect your business. Coupled with protecting and maintaining your relationships, and visibility (or lack thereof) over future developments, these are fraught and possibly emotional issues.

The steps you need to, or should, be taking depend upon the specific provisions of your construction contract or consultancy agreement. In particular, be aware of any advance notice requirements (e.g. 5.21 of NZS3910:2013) and time bars for notification.

Refer to our previous article on protecting construction projects against COVID-19 for more information. As the pandemic response environment continues to evolve, we will continue to provide timely information to support your business.

Our Construction team remains fully operational with remote working and business continuity plan in place. If we can support you in any way, please get in touch.

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