Concerns have been raised by a number of firms in construction sector about the potential for delays caused by a no deal Brexit leading to the triggering of penalty clauses within construction contracts, and the impact that this could have on firms within the supply chain, in particular SMEs.   The position of the Construction Leadership Council is that invoking these clauses should be a last resort, and that clients and firms in the supply chain should adopt an open and collaborative approach to identifying and planning to mitigate these risks before they materialise.  We would encourage early discussions between clients and firms, and for all those involved in the supply chain to both demonstrate flexibility and seek to ensure that risks are managed by those organisations best placed to do this.

In the short term, firms should take steps to:

  • understand their obligations and liabilities in relation to delays included within the terms and conditions of contracts they are party to or considering signing;
  • identify the key risks – whether to their workforce, or ability to secure sufficient products or materials to complete the project or work package – and ensure that planning to mitigate these is underway;
  • identify whether there are contract terms and conditions linked to the performance of other firms in the supply chain or the delivery of products or materials by suppliers;
  • review insurance policies and the cover these provide, and if necessary, notify your insurer of anticipated delays or potential claims;
  • identify whether there specific Brexit-related project plans or terms and conditions in relation to the project that are not included in your contract; and
  • consider including clauses relating to Brexit and potential delays within contracts that are under negotiation.

This is a complex area, due to the wide range of contractual practices within both the public and private sectors.

More detailed guidance has been prepared by BuildUK for our community here.

Further guidance available in the FIS Brexit Checklist.