Clifford Change - Market Update Flashcards
What was the impact of Russia Ukraine?
Main impact is construction supply chain disruption and inflation, exacerbating the impact of Brexit and Covid:
• fuel costs and material costs particularly in energy intensive manufacturing such as steel
Transport and shipping disruption
• delays in getting construction materials to site
Projects being redesigned if materials become to expense
Use local materials
Example - russian materials may no longer be allow to be imported
What recent contract trends with main contractors were discussed?
Lump sum contracts may become uneconomic (contractor taking on inflation risk)
May claim force majeure entitling them to additional time (Existing contracts)
Contractor lump sum costs will go up and longer programes (contractor will price as risk is higher)
More provisional sums due to unknowns with materials / labour etc)
Contractors will want better caps on LDs
May see CM procurement route where no one commits to price at start of the project
What could the contractor claim regarding EOT & L&E associated with the war?
Force majour - TIME ONLY
Exercise of statutory powers (Sanctions on russia) - TIME ONLY
Employer action / prevention - TIME & MONEY
Postponement - russian funding - TIME & MONEY
What is force majeure?
its an act which is not known at the time of contract which prevents the parties from fulfilling there obligations
What is a fluctuation?
lump sum price dont go up for inflation, tax etc (contractor risk)
Fluctuations allow for inflation or deflation to base date prices - move away from a lump sum cost where contractor takes risk
