11/01/2021
It is good business practice to put in place contingency plans for any major projects. How vital those contingency plans are has been demonstrated by Covid-19, where those plans have been critical to ensure the continuance of vital public services, in the context of the underlying restrictions to which we’ve all had to follow and adapt (both in our day to day and contractual working practices).
The government did act quickly to support the industry at the start of the pandemic, with relevant guidance provided pursuant to PPN02/20, PPN04/20 and, where relevant to the underlying project, by the IPA. COVID contingency planning should ideally already have addressed the underlying contracting entities’ position on the following issues:
a) parameters around contractual relief in the event COVID impacts on the delivery and performance of the underlying contract, the wider supply chain and potential additional costs which may need to be incurred. This could include, for example, parameters in relation to the impact of COVID on KPIs, and related resulting deductions / performance failures, as well as additional costs such as the purchase of PPE equipment for staff; and
b) staff/workforce implications, including staff shortages due to either positive cases of COVID and the related requirements to isolate (due to COVID related symptoms, a positive COVID test result and or close contact with an individual who has tested positive for COVID), or the need to protect those who are clinically vulnerable.
With the recently announced tier restrictions which apply following the end of “lockdown number 2”, and heading into what is typically the “cold/ flu season”, it is critical that contracting entities continue to further assess the impact of the latest restrictions on the ability of the underlying contract to be performed and address this within their respective COVID contingency planning accordingly.
Service providers, in particular, will be aware of the challenges caused by individuals needing to self-isolate where they are displaying certain symptoms which are more prevalent in the winter cold/flu season. In the “new normal” we are all currently facing, COVID related Government guidance requires individuals with certain symptoms (such as a temperature and/or continuous new cough) to self-isolate. This additional aspect of self-isolation is most likely to impact on individuals who are unable to perform their roles from home (including key workers) whilst isolating, waiting for a COVID test result or caring for children where school “bubbles” have closed.
It is therefore critical for all parties to PFI/ PPP projects to be clear about the impact staff absences will have and to consider whether any arrangements put in place earlier this year will still be fit for purpose through the winter and beyond whilst we wait for the roll-out of the vaccine programme.
It is also critical that contingency planning, and any specific details or general parameters around contractual relief which may be applied in certain circumstances, should be documented between parties. A clear agreement on the approach to be taken will enable service providers to react promptly in the event that COVID, or the associated issues of self-isolation, impacts on the delivery of the underlying project and services.
As well as outlining what types of relief may be applicable in principle, parties should also be clear about what documentary evidence will be required to support any claims made. Whilst many public sector bodies recognise that the private sector has in many cases worked diligently and collaboratively to help deliver vital public services across a range of sectors, budgetary pressures cannot be ignored.
The risk of a dispute will be significantly reduced not only by reaching agreement on principles around applications for relief, but by ensuring a clear audit trail of the impact any one issue has had on the project. Contemporaneous records are much better evidence than a retrospectively constructed explanation. Realistic, well explained and well evidenced claims are far more compelling, and far more likely to lead to a swift settlement.
Originally published by Partnerships Bulletin, December 2020
