Keep contracts up! Time to address the material shortage?
July 22, 2021
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Every week we see a multitude of press releases and comments on the current global shortage of materials. A common thread is that while no one seems to believe this will be a permanent long-term problem, no one seems to see much improvement in the short to medium term either. While most of the comments boast the merits of proactively managing the bottleneck, until recently, early notification and consideration of alternatives have suggested that few should contractually address the issue.
Many standard forms of construction contracts contain provisions on how to deal with volatility, such as the fluctuation provisions of the JCT. However, since the supply chains have been largely stable for many years before the pandemic (and Brexit!), These are mostly deleted. Given the current climate, is it time to reconsider their uses? and while such clauses can be helpful in terms of increasing costs, how do you deal with delays?
As with the COVID risk in 2020, the market will undoubtedly come to a firm position on how to bear this risk for time and money and when to contract it. In doing so, employers should also be careful about how this risk can be addressed in all related ownership and funding documents to ensure that there is no misalignment.
The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.
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