21 April 2020
COVID-19: Challenges facing builders and developers
At a time when it seems every hour brings a new policy, restriction or Ministerial Order, trying to wade through what might be the practical effects of both the health crisis and economic crisis we are facing is a daunting one.
Here’s a synopsis of the issues we are seeing in our building and developer practice as we push through this pandemic with our clients:
Extended days for construction work
The recently made Environmental Planning and Assessment (COVID-19 Development – Construction Work Days) Order 2020 allows construction sites to operate on weekends and public holidays during the same hours they operate on weekdays.
The aim of the order is to avoid a loss of productivity at a time when workers are required to adopt social distancing practices. In this way, construction projects can progress by allowing building work to be spread across more days of the week.
This order will be in place until the crisis is over, or another order is made amending these measures.
In this way, construction companies can seek to limit the amount of liquidated or other damages payable as a result of finishing a project later than the date for completion specified in a contract. The challenge will be to balance productivity against overtime and penalty rates payable to employees on weekends and public holidays. Another difficulty will be ensuring contingency plans are in place to maintain supply to the business to enable construction to proceed.
Further details regarding the order can be found here.
Developers and navigation of the approval process
Historically, development consents take longer to obtain in Sydney than anywhere else in the country. So much so that seasoned developers factor this time and cost into their feasibility studies. What’s the effect of COVID-19 on the approval process and what’s it mean for developers?
Read here for details on how the Land and Environment Court has been adapting to deal with the COVID-19 pandemic in an attempt to keep the appeal process moving and development consents flowing. Notwithstanding these changes, it is still likely that many matters will be placed on hold. This will have the flow on effect of delaying the granting of development consents and necessarily increasing holding costs for developers.
In better news for some, the NSW Government recently introduced changes to legislation which allows certain development to be carried out without the normal planning approval. Developments which these changes apply to include the conversion of business and buildings and land into vital services, the transformation of buildings into temporary hospitals and the transformation of community centres into homeless shelters.
In addition, on 3 April 2020, the Planning and Public Spaces Minister Rob Stokes acknowledged in a media release that the construction and development sectors will be vital in keeping people in jobs and supporting the State’s economic recovery following the COVID-19 crisis. On this basis, the Planning System Acceleration Program (PSAP) is being implemented with a view to fast-tracking assessments to boost the construction pipeline, keep people in jobs and the economy moving.
The aims of the PSAP include:
Fast-tracking assessments of State Significant Developments, rezonings and development applications (DAs), with more decisions to be made by the Minister if required;
Support councils and planning panels to fast-track local and regionally significant DAs; and
Clear the current backlog of cases stuck in the Land & Environment Court with additional Acting Commissioners.
We understand it is intended that the planning system will undergo further reform to ensure it enables economic growth once the COVID-19 crisis is over.
It’s hard to know what recovery from the COVID-19 economic crisis will look like and how soon we will pull out of the trough. When things do get back to “normal” we don’t know how many of the changes will be here to stay. Whatever the concern, we have a team at Bartier Perry, as well as a reliable network of expert consultants around us, who can help you work through this difficult time.
Author: Sharon Levy