Construction Lockdown: Potential Impact of COVID-19 on Construction Projects in Greater Sydney

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Under the latest New South Wales Public Health Order, all non-urgent work at construction sites in Greater Sydney has been paused from 12:01 a.m. on Monday 19 July until 11:59 p.m. on Friday 30 July.

New restrictions are set to compound the difficulties already faced by the construction industry in Greater Sydney, which include shortages of staff and unavailability of labour generally as a result of self-isolation requirements and stay-at-home orders, as well as delay or shortages of equipment and materials due to disruption to the supply chain. Other commercial risks posed by this recent lockdown may arise due to insolvency of other parties, and industry groups are warning of significant insolvencies if the restrictions were to continue beyond 30 July.

These additional COVID-19 related risks highlight the need for project participants to review their contractual rights and obligations in light of potential disruption to construction, as well as considering strategies to mitigate or minimise delays and costs.

Industry participants should review their current contracts for ongoing construction projects to consider any relevant force majeure, variation, extension of time and change of law provisions, and any applicable notice requirements, as well as considering the possible operation of any default or sunset clauses, or legal doctrines such as frustration.

It will be beneficial for project participants to document any relevant risk events, such as the current lock-down, and to consider what records may be necessary in respect of potential future claims or disputes. Owners and contractors alike should be mindful of the potential interaction of impacts of the current lock-down with other related and unrelated factors that may contribute to delays or cause concurrent or superseding delays.

For additional information on the impact of COVID-19 on construction and infrastructure projects, the following publications provide further commentary:

Olivia Taylor, in the Sydney Office, assisted with the preparation of this Alert.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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