EIC Statement on Construction Contracts under COVID-19
The COVID-19 pandemic is an ongoing outbreak of coronavirus disease 2019 (COVID‑19), caused by severe acute respiratory syndrome coronavirus 2 (SARS‑CoV‑2), which has been declared a pandemic by the World Health Organisation on 11 March 2020. European and other international and national contractors have responded to the COVID-19 pandemic by taking preventive measures to safeguard the health and lives of their workforce, construction partners, clients and society at large and, thereby, are facing significant additional costs. With few exceptions, however, employers around the world are mostly reluctant to grant adequate financial compensation to contractors in the light of higher production costs arising in connection with the COVID-19 pandemic.
Best practice for cost-related claims EIC welcomes that some governments have published guidance to national contracting authorities on how to deal with contractors’ claims for financial relief and we have collected best practice approaches which address the identification and quantification of cost-related claims. With a view to new tenders, EIC insists that employers must clearly stipulate whether bidders are to calculate and take into consideration costs or risks related to COVID-19-related matters. For instance, the period of COVID-19-related health and safety measures is uncertain and for the purpose of calculability and to ensure the comparability of bids/offers, employers must determine a period of validity for these measures.
EIC calls upon employers to:
recognise that the COVID-19 pandemic has an impact on estimated project budgets and on the time for delivery. We call upon employers to engage constructively on each individual contract by showing flexibility beyond the pure letter of the contractual relationship. EIC encourages employers to introduce specific mechanisms to capture and absorb COVID-19-related additional costs of contractors, e.g. for having taken preventive or corrective measures to continue with the execution of the works, and to grant them an extension of contractual deadlines related to the performance of the contract and their contractual obligations. Such approach will avoid an enormous administration, bureaucracy, disputes, and court procedures between the parties (including the supply/subcontractor chain) related to construction projects.
precisely describe their expectations and requirements in relation to the treatment of all occupational, commercial, or other issues related to the COVID-19 pandemic so that tenderers are provided with a reliable basis for their tender preparation and calculation.
EIC calls upon the Heads of Procurement of the Multinational Development Banks (MDBs) to inform MDB Borrowers about existing best practice examples with respect to cost relief for COVID-19-related extra costs and to advocate similar policies on infrastructure projects financed by the MDBs.