Unravelling contractual challenges faced by the construction industry in a pandemic situation : the case of covid-19

Abstract

The construction industry cannot be exempted, as it has faced huge issues due to COVID-19 pandemic. Among them, contractual challenges, which have legal implications, can lead to many disputes and it raised to assist contractors in claiming a loss, expenses, and extension of time. Conflicts arise between parties to the contract and among the majority of stakeholders. A successful contractual implication can manage the contractual challenges arising within construction job sites. Following questions are addressed to manage these unprecedented situation-related contractual conflicts: ‘what are the contractual challenges faced by the construction industry?’, ‘what are the most applicable contractual provisions to a pandemic situation?’, and ‘what are the strategies to unravel the contractual challenges in a pandemic situation?’. The questions were discussed by descriptive elucidation of existing literature. A Systematic Literature Review (SLR) was conducted to identify contractual challenges encounter during a pandemic. Disruption in project works, issues in the supply chain, labour shortage and productivity loss, delayed payments, and nine other main contractual challenges were identified through SLR. Multiple-mixed qualitative methodological research choice was adopted aligning the inductive approach and qualitative survey strategy. First, the document review was conducted and analysed by reviewing the internationally popular forms of contract, FIDIC and locally popular forms of contracts standard bidding Documents (SBDs). Consequently, contractual provisions for pandemics in a few standard forms of construction contracts and case laws were synthesised. Adjustments for Changes in Legislation/Law, Force Majeure, Compensation Events, Right to Claim, Extension of Time, and Exceptional Events were identified as main contractual provisions as outcomes of the document review. Moreover, semi-structured interviews were conducted adopting the purposive sampling method and each respondent had experience and knowledge about contractual challenges and was involved in construction projects during the pandemic period. Thirty-four contractual challenges were identified including price increments and the uncertainty in project commencement through literature review and interviews. Finally, the study provided individual strategies for identified fourteen contractual challenges, to prepare for future pandemics and to minimise the destructive impact of contractual challenges due to any pandemic.