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EIC Statement - The Impact of the Russian-Ukrainian War on Construction Contracts and New Tenders

Statement on Ukraine CC Shutterstock 2082478807

EIC calls in the spirit of collaboration and partnership upon all the participants of the construction industry, i.e. clients / employers, financiers, consulting engineers and contractors, across the globe to recognise the effects of the Russian war against Ukraine, and to engage constructively, whether on existing contracts (with re-activeness and flexibility) or on future contracts, to make full allowance for the balanced share of the risk necessary for the implementation of projects.

The current military conflict, with its wake of misery, has caused shock and consternation worldwide, but particularly throughout the European continent. Mindful of its duties towards its members and the industry at large, EIC publishes this paper on the foreseeable period of economic instability, which started with the COVID pandemic but has been dramatically amplified by these recent aggressive military events. The paper explores the impact on the construction industry and how it should be addressed to avoid further disruption.

At a time when the economy appeared to be emerging from the effects of the pandemic, the Russian invasion of Ukraine has generated a new wave of disruptions, for example:

  • The immediate shortages of materials and services produced or provided in/from the conflict-affected areas of Ukraine and Russia. In particular, Russia is a key supplier of steel, iron, nickel, chemical products and wood. Critical exports from Ukraine also include steel, iron, nickel and chemical products, as well, as machinery and transport equipment;

  • Shortages in qualified personnel;

  • The subsequent consequences of international sanctions against Russia.

It is thought that the full and far-reaching effects of the political sanctions are currently unfathomable and hence incalculable. Furthermore, imbedded inflation from increased energy costs will only be exacerbated by the fact that Russia and Ukraine are producers of many goods and services, including for the construction industry. The expected effects are:

  • resurgence of inflation;

  • delay and disruption of the supply chain; and

  • stringent compliance issues.

Please read the full EIC Statement below.