Hi. I'm Neal Gosling, National Head of Residential Development to Shakespeare Martineau. Welcome to today's webinar on getting construction sites Back on Track after locked down. In this webinar we will discuss the position with contracts and supply chains, employment contracts and workforces, and take a practical look at how you can get your site back up and running with a minimal delay.
Today, I'm joined by my colleagues, Ruth Phillip's partner in our Real Estate and Construction Team, and David Browne partner in our Employment Team, both of whom will be presenting and available to answer your questions.
If you would like to ask Ruth, David, & myself, any questions, please use the Q and A button on the screen, and we'll respond to all of these directly and after the session.
As part of this webinar, you will have access to Freight Helpline to assist with any questions you might have in respect of development specific issues. Details will be provided at the end of this presentation.
To state the obvious, a lot has changed in the house building sector over the last three months. The impact of covert 19 will leave a lasting impression on the housing market, and challenge the industry to adapt quickly and do things differently.
Bill drought rates have dropped by 81%. And this is anticipated that it will take at least a year to get back to pre coven build numbers.
Consumers' needs have changed. As working from home has moved from being a luxury to a necessity.
Articles and webinars are constantly referring to our current situation as being the new normal. But the fish's anything.
But normal until we have evaluated the true impact of co fit on the housing market, under construction market, and adopted the housing building sector to accommodate the new social, economic, and environmental requirements of consumers. We're working within a State of transition.
We're in fact, in, we are, in fact, what we at Shakespeare much now like to call working within the new abnormal, it's anything but normal at the moment.
As development sites begin to re-open, significant challenges are rising to the surface, causing further disruption to developers. The proposed conclusion of the helped by funding for House Bill does at the end of 2020, impose further pressures on House Builders to motor forward with the build of all plots that are being sold with the benefits of such funding.
In addition, uncertainty in the mortgage market, social distancing requirements and the unprecedented demand for materials are creating significant challenges for both the construction and the sale of houses and other buildings.
Developers now need to re-evaluate the way things are done.
Use this unprecedented situation to get their house in order and ultimately challenge the norm by being innovative.
Thinking outside the box to maximize opportunities, in what will be a very different market, the housing market has to and will bounce back.
So hopefully throughout this webinar we can give you some nuggets of information that will allow you to be better prepared for the inevitable upturn.
So with that in mind, please let me introduce you to my colleague, Ruth, Roof, over to you.
So, thanks for that nail. And what's been very interesting about the UK's unlike certain parts of Europe, sites actually never claimed the government never gave advice to close building sites, even though, I think, in some places, police were going around, trying to set claes building sites. So, you know, there's not the issues that works, never stopped on site. But, obviously, I think one of the major issues is the fact that now there's not so many people working on site. We will be having to look at long working days on site. And, obviously, that's going to be a change in program. Wanting, all have to do is look at work and practices. If your contractor suggesting that they need to be worked until nine sites. You might need to be looking at your planning.
Check to see whether this is acceptable or whether this will put you in breach, and if you actually need to get this amended so that you can continue with these different working practices. CIC has a lot of information about working on site. I think that by now most people know what needs to be done on site in relation to close working. So I don't think this is an issue at this stage.
Another point that I just touched on there was planing consent.
There's lots of different views about planning consent if you're looking to get work started on site, and you get planning, commission, new works, and you may find that there's going to be delayed because of fertilizer councils. And I am seeing some of my clients or continue delay in getting permissions out of councils. However, on the other hand, son councils, a couple in London. We're seeing the information is being pushed through quicker because there's been a drop in the number of missions planning applications that they're receiving.
So don't take it that it's bad news that I would factoring delays in getting your planning consents and she'll programs, and more delays. I'm afraid to say utilities. And as we all know, utility providers on a toll is the slow getting on site and providing their services. All I can say at the moment, what's been slower till this state is now getting even slower. And I understand that they have got major backlogs of work, which will only get worse. So again, when programming your work, you really need to take this into account that the fact that utilities are going to be even slower, getting on site, and carrying out their works.
Um, the other issue, we'll spotting is materials and the delivery of materials on site.
There are still major delays with certain materials, which spotting, say, plaster, close greed, and doors of all we're all caught major leading times. And we also understand that the price of plaster has gone through the roof, because as solar, flip it around and pretty much people fighting for it at the moment. So again, we really need to be factoring these additional costs and these additional delays into your program. And if you've got works on site at the moment, you've probably been noticing this as well.
So with all these delays going on the one thing, and we are bracing ourselves as a result of that, is insolvency situations in the supply chain. And we've started to see this already. We've had a number of smaller contractors and suppliers go insolvent and again it's looking for signs of these on site. And obviously it will slay works down.
Obviously, you have to be careful because some of the signs of insolvency could, simply because it be because of covert. So less people on site and a lack of tables and site. These are the traditional signs of insolvency. However, it could be due to code it. So we suggest your project managers are looking very carefully at what's happening on site and dig deeper than what's the traditional signs are. And look very carefully applications, the payment, and be very certain that those works have been carried out.
These materials are being bought, and also there's other things we can advise within solvency of the forms of protection that you can take out, For example, forms, bond, which would just provide an extra layer of protection fuel cells.
And going forward, what we're looking to see is what we're seeing a lot of is Koby Clause is going into contracts, and contractors are trying to add additional protection, and tools is now up until the state covert. They're using the Full Measure provision to try and get extra time due to delay. And we're starting to see an influx of applications for an extension of time. And we're looking at those with a number of project managers.
And, the one thing I think you have to remember is that the bar is set extremely high code that they've got to show that they've used best endeavors to try and mitigate the delay. And this actually, is a, it's a very high bar. And I don't think a lot of contractors at this stage of realizing this. I think they're putting applications in for extensions of time. And I think a number of them are going to be rejected. They really need to be showing that they have tried to mitigate the delay. And examples of these are, for example, they can have to put extra shifts on site of labor. And also, if they can't source materials, can they find alternative materials that are actually more expensive? And unfortunately, they are more expensive. The contractors are going to have to bear the cost of those materials. So, at the moment, we want to get sites back moving, definitely, but we need to be very careful about what we're giving extension of time, or that they do take all the criteria in the different contracts.
And going back to the Cave for drafting. And we are rejecting of tools that we're seeing, I know there's a concern of a second wave of covert 19, coming into the country. But at this stage, I think, winds down the work and practices, we understand the delays morph the drafting, I think we would prefer to see proper programming and proper pricing works to ensure that all parties understand the risks at this stage that taken into account and projects.
So, I think, going forward, one of the things we're expecting parties to do it, rather than just drafting talking to each other, just accepting the programs are going to be far longer than they previously had. Unfortunately, the fact that the prices of projects are going to, know, they're going to be more expensive, and when we're looking at tend to returns really going through these forensically and making sure it's not just the case that the contractors' wanting to win the work That they're properly pricing. The work at that stage, romping, getting further down the line on the costs of being extended. Shoot, that, actually the price, materials, pre cabinet, and actually they can't get those materials. Those prices, something upfront conversations, is what we're expecting at this stage, rather than trying to draw from contract, which doesn't actually do with issues at this stage.
So in concluding, I have to admit, I don't seem to have quite a lot of negative messages here, but I think we have to understand that this is the new abnormal and they're all going to be delays. Projects are going to be more expensive, and there is the chance of insolvency along the supply chain. Obviously, we have, as Neil mentioned earlier, We have got the legal helpline to offer advice simulation 20 days. But I think the message I want everybody to take away from today is that if we look at these matters at the start of the project and I think you've at least open and honest. And you have conversations with your project managers, with your quantity surveyors and discuss all these, these issues that I've mentioned today.
This should ensure that a program and a cost for that works is, is agreed at the start and is understood. By the time you get to, then, there shouldn't be as many issues on the site in relation to an extension of time for these items. I much prefer these things to be discussed in the open to then know nasty surprises at the end. And I know we're seeing a lot of attempts at the kinds of jobs, but I much prefer to see all of these items discussed in a pin and concluded. And so there's far more certainty in the whole process, and on that note, I'll pass you over to David.
Thanks very much, Ruth.
Your employees matter as we come out, these unique circumstances. You're going to want to ensure that your business maintains the confidence and morale of the workforce whilst remaining fleet of foot in meeting operational needs and keeping one step ahead of your competitors.
In order to do it, it will no doubt require some consideration in the following issues.
In terms of furlough businesses up and down the country, not least in the construction industry have understandably been taking advantage of that government furloughs scheme.
However, what you need to remember is that the rules the scheme are changing yet again over the course of the next few months. This will be at an additional costs to employers to ultimately be required to make a 20% contribution to the cost of the scheme.
You may need to factor these costs into the running of your business.
We know that from August it will be possible for employees to bring furloughed employees back on a part-time basis, whilst remaining on furlough some of the time.
We'd expect that successful businesses will take advantage of this flexibility as the industry feels its way around life after the worst of the pandemic.
But we also know Scheme is due to come to an end on the 31st of October, and I'd be very surprised if the scheme is extended further. As such, businesses will need to think about life after furlough and start to think about making workforce plans now.
Leaving an assessment until the first of November is really leaving it too late.
We'd expect businesses to start looking in the next few months and the workforce's they will need coming out of the lockdown. For many, this will, unfortunately, include the need to make redundancies, which will require consultation on an individual and potentially a collective basis depending on the numbers involved.
You may also need to think about whether that consultation will be held on a face-to-face basis or if it'll be necessary to conduct the consultation remotely.
Bear in mind that remote consultation is not necessarily straightforward, so you'll need to think about how that operates in practice.
We also expect that if employees are made redundant, has not previously been followed, this may be an issue in terms of whether the whether those dismissals fair, so again, organizations will need to think about providing justifications for why furlough has not been used as an alternative to dismissal.
We may also see organizations arguing that it's necessary to make furloughed stuff redundant in the coming months because they cannot afford to make the employer contributions to the scheme in the months ahead.
Whilst in the short term, employers may be tempted to make redundancies in order to make cost savings.
When the economy gets back on track, it will be important to have the resource to meet demand, So we would encourage employers not to cut too deep, too quickly, so, again, this would require some forward planning in terms of what you need as alternatives to redundancy.
Do you, instead want to make changes to working hours, introduce love provisions, or explore other options in terms of keeping the workforce you have? Put in a way that is economically viable.
Bear in mind that this may require changes to terms and conditions of employment, which will require agreement either on an individual or collective basis.
If your organization is unionized, you'll want to understand the terms of your recognition agreement so that you can bring about contractual changes without being caught on the back foot or facing a dispute.
Connected to this, you'll be aware that there have been changes to the law in terms of employees being able to carry the annual leave, but they've not been able to take it because of ... team.
We are seeing a drop in employees taking a holiday, because they do not want to. Last a proper holiday is not available to them.
It's possible under the working time regulations to request stuff to take holidays given times. And organizations may want to think about taking advantage of these provisions to ensure that they are not faced with swathes of holiday requests at the same time under precisely at the time but an upturn in work means employees and needed on site.
Turning to health and safety issues, there are of course highly prescriptive legal obligations for employers to comply with in terms of ensuring that a safe working environment is provided taking into account the risk of infection. Knowing the construction industry, it's very often the case the employees are needed on site, but employers should also give consideration as to whether somewhere else can continue on a remote basis.
Where on site work isn't necessary, employers should ensure that appropriate health and safety risk assessments have been taken, unnecessary changes implemented.
Remember, the law in this area is very prescriptive, so that would be far less freedom for employers to justify adopting a light touch in terms of their approach to health and safety.
You may, of course, also be faced with employees who do not want to come back to work on site, because of health and safety concerns, or employees, who you are concerned about having onside, because if your perceptions about their own health and well-being.
In terms of the former, it's important to remember that employees cannot be subjected to detriments to rising health and Safety concerns. And any dismissals stemming from such disclosures will be automatically unfair.
As such, employers need to be careful not to be too heavy handed in dealing with employees who refused to come on site because of health and safety issues.
Turning to the second issue, employers should not jump to conclusions about not having certain employees on site because of their perceptions about the employee's own health.
This may lead to claims of discrimination, and again, any dismissal flowing from this issue is likely to be either unfair, discriminate tre, or probably both.
Employers will need to think about obtaining appropriate medical evidence, before making any rushed decisions about the practicality of preventing someone from attending work, or even, in fact, dismissing them.
The heart of all of this is that your employees will remember how they've been treated by you through this crisis!
Successful businesses will be those that make tough calls, but in a way that respects and is open with their workforce.
On the flip side, employers forget about the anxieties suffered by many of their employees in the current climate, and pushed through decisions without respect or compassion that can expect not only legal issues, but a drop in morale and engagement.
This really is the takeaway message. Not all employers are going to get this right. If you make sure that your organization does, it will put you in a better position to come out of this crisis with the right workforce, and one that is engaged with you.
Neill: Many thanks David, and thank you both David and ready for your insightful comments. So that brings to an end, this webinar. I hope you found it useful and relevant in this current circumstances. If there was something you would like further information on, will have a specific query that you would like to discuss. Please do let Ruth David, all myself know, and we'll be happy to help.
So as I referred to earlier, we're offering a free 30 minute video call on issues, such as specific to your business, to support you through this transitional period, giving you direct access to a senior team of experts for free legal guidance. Details are on the screen if you'd like to book a session.
And, finally, please do visit SHRM, A on demand page to access recordings of all of our webinars and Shakespeare Marciano talks.
Please join me in our conversation on LinkedIn and Twitter.
Thank you for joining us, and best of luck.