Construction Delays Yet to Descend into Legal Fracas

Social distancing has had a larger impact on construction schedules than the shock to supply chains or site access, with construction sites largely staying open during Covid-19 lock downs.

Intense lobbying from property industry groups and unions kept construction sites open nationally over March and April as the attention of the sector moved to easing restrictions and government stimulus.

A survey of Property Council members revealed that the impact of public health measures was the leading contributor to construction delays, with 46 per cent responding that their projects had mostly remained on schedule.

Property Council chief executive Ken Morrison said that developers and builders had been amicable for the most part.

“Most parties have demonstrated their preparedness to work together without resort to formal dispute resolution tools,” Morrison said.

The peak body for quantity surveyors said that the survey showed the industry is proactively collaborating and avoiding formal disputes.

“Our members are aware that some builders have submitted notices of potential delay that don’t seem to be developing into actual claims,” Austalian Instiute of Quantity Surveyors chief executive Grant Warner said.

“However, if Covid-related restrictions don’t lift soon and if the market contracts further this may well change as developers and builders become more contractual to protect their position.”

Related: Home Sales Fall as 600,000 Jobs Lost

The latest new home sales index from the Housing Industry Association revealed that falling sales had pushed project cancellations to more than 30 per cent—four times the typical rate.

“In net terms, this equates to a contraction of more than 50 per cent in the volume of new building work, [which] will be felt in the second half of 2020,” HIA chief economist Tim Reardon said.

In April, industry body Master Builders warned that the worst is yet to come, as future work indicators fell by up to 40 per cent. Housing starts are expected to dip below 100,000 in coming quarters, falling to levels last seen in the 1960s.

Reardon said Covid-19 has further compounded a slowdown which has been under way since mid-2018.

“The volume of home building under way at the end of March was already 18 per cent lower than in mid-2018.

“Even the removal of all Covid-19 restrictions will not prevent a material deterioration in work and employment in the home building sector in the second half of 2020 and into 2021.”