Are you involved in a construction project in Victoria?

On 3 August 2020, the Victorian Premier Daniel Andrews released a statement in the wake of the COVID-19 pandemic introducing Stage 4 restrictions which will significantly impact the construction industry.

In this statement, available here, the Victorian Premier reiterated his announcement of 2 August 2020, where he outlined a three-tier structure of business closures which, with exception to some warehousing and meat processing centres in regional Victoria, will apply for metropolitan Melbourne.

The construction industry, which falls into the third tier, is permitted to continue to operate, but under significantly reduced operational conditions.

Premier Andrews said that ‘the construction industry will be scaled back to “pilot light levels” to allow projects to resume, without completely ending operations’.

Major construction sites are restricted to operating with only 25% of the normal workforce allowed onsite at any given time whilst small-scale construction sites such as residential construction sites are limited to a maximum of five workers onsite at any one time.  

The restrictions come into effect from 11:59pm on Friday 7 August.

Victoria will no doubt see an influx of delay claims and project cost blowouts in the coming months, as principals, contractors and sub-contractors fight for survival.

It is highly likely that construction contracts entered into pre-COVID-19 will not contain adequate provisions dealing with issues such as extensions of time, delay costs or liquidated damages arising as a result of a pandemic such as COVID-19.

With contracts being ill equipped to respond, all parties involved in the delivery of construction projects, including banks and other financiers, are potentially at risk of significant loss.

Bartier Perry recommends that any individual or business which owns, is developing, is operating at or supplying, a construction site in Victoria seeks legal advice.

Author: Jack Williams

Contributing partner: Mark Glynn