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Is COVID-19 a NEC Compensation Event?

Businesses are having to take difficult decisions on whether to furlough staff whilst also having to get used to a new reality and fundamentally re-engineer how they deliver their projects.

Businesses are under immediate pressure on deciding which projects to prioritise and which to ‘moth-ball’ with the lock-down being potentially extended till the end of summer. Both this and the subsequent NEC commercial notices to the to their supply chain needs to be done in a methodological manner. Some brainstorming would need to be done to set the conditions that would have to be met to resume a project. In addition a Last Planner session would need to be held to record progress to date and WIP accounting assessed. 

Businesses also need to think now about the post the lock-down phase: on which projects to prioritise to resume; in which order and how they could be accelerated to recovery with inevitably more scarcer resources.

Despite the lockdown it is still important for Project Managers to mange the impact on their supply chain and for PMO, Planners and Commercial Managers to record the impact and develop recovery options.

UK Construction had a pre-tax profit margin of just 1.5% with an average waiting time of 83 days to get paid before the COVID-19 crisis. With razor-sharp margins the construction industry will be heavily impacted.

Companies need to take corrective actions now to ensure they fully protect their own contractual position and have an adequate cash cushion till this is all over, somehow.

DADA is still here. We are already helping businesses in practical issues such as notices for Termination, Force Majeure, NEC Compensation Events, WIP Schedule accounting and Last Planner collaboration planning.

We have put together a short video on some practical issues from a NEC perspective covering Termination Notices, Force Majeure CEs and WIP Accounting.

See our video for tips to increase your Working Capital, manage the NEC/JCT commercial impact and reduce the impact on your staff’s welfare.

Download our quick reference guide on how companies are now having to rethink how projects are defined and planned.

Download “Survive the Economic Impact”

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