Stage 4 Restrictions Move Many Victorian Construction Projects on to the Back Burner

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The government's latest restrictions will impact owners, contractors, and suppliers.

The Victorian Government has moved the Victorian construction industry to a "pilot light" status from 5 August 2020, until at least 16 September 2020, as part of the Government's response to the second wave of COVID-19 cases in the State.

The Government's pilot light setting includes a number of additional restrictions on the construction industry which will inevitably impact owners, contractors, and those businesses (local and interstate) supplying goods and services to the construction industry. The new restrictions include:

  • A maximum workforce of five people on small-scale sites;
  • A maximum workforce of 25% of the baseline workforce on large-scale construction sites. The baseline workforce is to be calculated by reference to the daily number of workers on site across the project's life, and will be subject to audit;
  • Restrictions on the movement of personnel between sites; and
  • A requirement to prepare a High Risk COVIDSafe Plan which details how each business will comply with government directions. A template COVIDSafe Plan is available at the Business Victoria website.

A construction site will be considered a large-scale site if it is:

  • More than three storeys high (at completion) or larger than 1,500 m2 in floor size;
  • An office or retail fit-out; or
  • For industrial, large format, or retail use.

The move to a pilot light strategy for the Victorian construction industry will compound the impact of the COVID-19 pandemic on many Victorian construction projects, though there are exceptions for critical and essential infrastructure and major projects prescribed as 'State Critical Infrastructure Projects'. We would expect these restrictions to give rise to a raft of contractual claims on affected projects, whether under extension of time, change in law, or force majeure provisions.

It is critical for businesses to keep good records in support of potential claims, including, for example, records of: (i) the status of the works and actual productivity prior to the restrictions; (ii) the impact of the restrictions on the works and productivity; and (iii) the measures that may be available to mitigate delays, or recover schedule, when restrictions are lifted.

For further insight on the impact of COVID-19 on construction projects and disputes around the world, see Jones Day's three-part White Paper titled, "Construction Projects and Disputes: Beyond the COVID-19 Lockdown", and our upcoming publications on some of the major impacts of the pandemic, including the possibility of significant time and money claims in respect of disruption and delay and the risk of other contractual claims.

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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