Most construction delays related to COVID-19 are being solved through negotiation, the latest survey has found.
Releasing the results of its online survey of 178 developers, head contractors and subcontractors conducted between May 6 and May 11, the Property Council of Australia said the coronavirus was creating significant pressure on project schedules.
All up, almost four in ten (38 percent) respondents reported that public health measures associated with COVID-19 were having either a moderate impact which had created some delays in construction (24 percent) or a severe impact which had caused significant scheduling delays (14 percent).
Furthermore, more than half (54 percent) of developers surveyed say their builder had issued them with a notice of potential delay.
Despite this, the survey indicates that most issues are being worked through in a constructive manner.
All up, 82 percent of respondents said construction delays are being addressed through negation between the parties.
Only four percent have needed to refer to contract terms whilst only three percent and two percent have required third party mediation or contract provisions relating to liquidated damages respectively.
Indeed, almost six in ten respondents (59 percent) say that negotiation has led to a successful resolution of delay related issues (including through extension of construction schedules).
In a further 39 percent of cases, negotiations are ongoing.
Where issues remain unresolved, 45 percent say these will be handled through negotiation whilst only three and five percent respectively anticipate resolution through liquidated damages or third party mediation.
Property Council of Australia Chief Executive Officer Ken Morrison commended the industry for its effort to work together to resolve issues.
“These are unique and very challenging circumstances, but most parties have demonstrated their preparedness to work together on solving the problems thrown up by COVID-19 without resort to formal dispute resolution tools,” Morrison said.
“Developers and builders are under enormous financial pressure due to the economic impact of COVID-19, but they have been working their way through these challenges cooperatively.”
According to the survey, the leading contributor to construction delays was the impact of public health measures on site productivity (39 per cent), followed by offshore procurement (32 per cent) and site access or shutdowns (12 per cent).
Although construction sites have been able to stay open during the COVID-19 period, they have been working under stringent physical distancing and hygiene arrangements.