Driver Trett Digest Issue 21 03.2021 - Flipbook - Page 36
DIGEST | ISSUE 21
circuit breaker on 7 April 2020 until
the date when all dormitories are
announced to be cleared on 6 August
2020. The government agencies
would also co-share on an ex-gratia
basis 50% of the prolongation costs
for project delays due to the circuit
breaker, capped at 1.8% of the awarded
sum for a period of nine months.
By way of simple illustration, workers will spend half a day
for a bi-weekly and mandatory swab test, which in itself
is a loss of productivity of 4% per month. Alongside this,
many projects simply cannot get to the level of resource
needed to maintain the original progress allowed for and
anticipated.
The above scheme was soon extended
to include private sector projects
through Part 8A and Part 8B of the
COVID-19 Act which came into effect
on 30 November 2020. Under Part
8A of the COVID-19 Act, a universal
extension of time of 122 days was
granted to address delays that arose
for the period between 7 April 2020 to
6 August 2020 (both dates inclusive)19.
Under Part 8B of the COVID-19 Act,
contracting parties are to co-share
50% of the qualifying costs20 subject to
a monthly cap of 0.2% of the contract
sum per month, and a total 1.8% of the
contract sum where such costs are due
to delays caused by COVID-19 during
the period between 7 April 2020 and 31
March 2021 (both dates inclusive)21.
We have been working on projects where labour levels are at half the level
originally allowed. This is because many projects relied upon daily commuters
from neighbouring Malaysia coming to Singapore, which remains suspended due
to the COVID-19 levels found in Malaysia.
Such restrictions in other countries continue to affect delivery of necessary
materials. For example, suspension of manufacturing in China and Malaysia means
projects in Singapore are unable to obtain the necessary materials on time and are
either having to wait or source materials, often at a premium, from other places.
Therefore, it is essential that careful attention is given to the contemporaneous
documents being maintained for a project, and that avenues are still being
reviewed to ensure:
1.
2.
Delays and reduced productivity can be identified and assessed ; and
Claims for both time and cost against delay disruption are addressing the
wider issues.
How this occurs is not universal and will be specific to each case.
EFFECTS PRACTICALLY
Although the law has sought to calm
drastic measures being taken and/or
imposed by companies operating in the
construction sector, the reality, from
a practical perspective, is that many
issues remain uncertain and have yet
to be addressed.
CLAIMS FOR DELAY AND
DISRUPTION
Without doubt, the COVID-19 Act and
legal assistance provided has meant
most businesses have protection
from being imposed with liquidated
damages from their employer to a
certain extent; particularly for the
lockdown periods encountered within
Singapore. However, what must be
remembered is that the number of
workers and conditions upon how work
can be completed has fundamentally
changed for many, from what could
have ever been contemplated when the
works were tendered.
36
CLAIMS FOR INCREASED COSTS
The effects of the pandemic have meant, essentially, it is now more expensive
to build in Singapore. Simply put, the cost per m2 or m3 has increased, and in
many instances, increased significantly.
Both labour and material shortages are, naturally, causing a supply and demand
issue whereby the average cost will, and has, increased. Similarly, significant
extended periods of time are being required to build, which causes the time related
costs to become much
higher.
Even though some recovery of the increased costs is allowed under the new
COVID-19 Act, it is, without doubt, leaving a significant hole in the construction
sector as the original revenue anticipated will not cover the actual costs being
incurred. As such, the obvious question being asked and needing to be answered
is - who should pay?
Needless to say, all parties are, or should be, looking to consolidate what these
additional losses are and the extent to which they can be recovered.
WHAT NEXT FOR THE CONSTRUCTION INDUSTRY IN SINGAPORE?
While the COVID-19 Act has temporarily staved off a multitude of lawsuits, with
the impending deadline of 31 March 2021 looming over the construction industry,
it cannot be ignored that parties must consider their positions very carefully;
particularly when so many practical issues which remain unresolved will inevitably
be commercially significant.
It is important to pay attention to the
variation, recovery of loss and expense
and extension of time provisions in the
construction contract to determine if
these provisions are sufficiently broad
to accommodate the COVID-19 event
and any consequential effects of the
COVID-19 event. Generally, under
the major standard form contracts
in Singapore22, parties would likely
be entitled to more time but not
loss and expense for delays arising
from a COVID-19 event. However, the
nuances of the particular case must
be considered along with the specific
conditions and requirements placed
upon the parties under the Contract.
Alternative options such as, parties
considering force majeure provisions
or the possibility of raising frustration
as a defense to a COVID-19 event
cannot necessarily be ignored and may
have to be addressed as disputes look
to be resolved.
Notwithstanding this, these immediate
challenges will emphasise the need
to continue to push forward the
construction industry in a positive way.
With a strain being placed on traditional
forms of building, such as the use of
foreign labour, the need to re-think or
accelerate new ways of construction
should become paramount. For
example, Singapore made Design for
Manufacturing and Assembly (DfMA) a
key pillar of the Singapore Construction
Industry Transformation Map. It is a
method of construction that involves
a much more controlled form of
construction, off site in manufacturing
type conditions, which in turn reduces
reliance on labour intensive methods
of construction. There is no doubt that
if anywhere can push these progressive
measures forward, it is Singapore!
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
Statista, https://www.statista.com/statistics/625473/gdp-of-the-constructionindustry-in-singapore/
Ministry of Trade And Industry https://www.singstat.gov.sg/-/media/files/news/
gdp3q2020.pdf.
See footnote 1.
See footnote 1.
Section 4, COVID-19 Act.
Section 5A(1)(a), COVID-19 Act.
Section 5A(1)(b), COVID-19 Act.
Section 5A(1)(c), COVID-19 Act.
Regulation 3(3), COVID 19 (Temporary Measures) (Extension of Prescribed Period)
(No. 2) Order 2020.
Section 5(3)(a) and Section 5(3)(b), COVID-19 Act.
Section 5(3)(n), COVID-19 Act.
Section 5(3)(c), (d), (e), (f), (g), (h), (i) COVID-19 Act.
Section 6(2), COVID-19 Act.
Section 6(5), COVID-19 Act.
Section 6(6), COVID-19 Act.
Regulation 3(3)(c) COVID 19 (Temporary Measures) (Part 8 Relief) Regulations
2020.
Section 37, COVID-19 Act.
Circular on Treatment of Claims Arising from COVID-19 in Public Sector
Construction Contracts dated 25 September 2020 and Circular on Ex-Gratia CoSharing of Prolongation Costs due to COVID-19 dated 29 June 2020.
Section 39B(1) and (2) of the COVID-19 Act.
Qualifying costs include rent, hire purchase agreement, costs for maintaining
construction site, costs to extend the validity period of any insurance obtained
and performance bond issued, any rent / fee to store construction materials or
equipment etc.
Section 39D(1), (2) and (9) of the COVID-19 Act.
For e.g. SIA Building Contract and PSSCOC 2020.
37