Weather patterns in 2021 and 2022 have been – at best – challenging for construction, and this has put many projects under pressure. Extensions of time may not be available for the prolonged wet weather that has affected much of the east coast of Australia, and force majeure clauses have generally been of little assistance as prolonged wet weather does not easily fit into ‘usual’ heads of force majeure such as there being a named cyclone or flood.
It is common for building and construction contracts to pass the risk of inclement weather down the contractual chain to head contractors and subcontractors. If the weather is good, a contractor or subcontractor can build additional days of contingency to finish early or to deal with unanticipated delays. If the weather is bad, then a contractor or subcontractor has an increased risk of not achieving practical completion and incurring liquidated damages.
With continued wet weather predicted for 2022, all parties to a current or upcoming project may want to consider whether the status quo of looking to pass down the risk of inclement weather will result in a good outcome for the project.
For current projects, parties will have to work within their existing contractual frameworks in relation to inclement weather. This noted, principals on projects that have been materially affected by wet weather may wish to consider whether there is a commercial benefit in granting an extension of time even if there is no contractual entitlement.
While the commercial drivers will vary from project to project, making a commercial decision to grant an extension of time under the contract could help to prevent future disputes and claims. Put another way, disputes and claims may not be made if a party that is under time pressure is granted some relief, allowing all parties to the contract to refocus on achieving a successful outcome for the project.
Any commercial agreement to extend the date for practical completion would need to be properly documented in accordance with the contract to avoid any argument that time has become at large.
Looking forward, all parties to a project should consider whether the general approach of looking to push the risk of inclement weather down the contractual chain on projects with tight construction programs is sustainable. Some alternatives to consider include:
The definition of wet weather or inclement weather should be carefully considered so that the definition works for each project. This is something that contractors in particular should be careful to consider: there can be a successful negotiation to include inclement weather as an extension of time claim but the definition of inclement weather may then be a high bar to achieve before any extension of time can be granted. For example, there may be a requirement for six hours of ‘continuous’ rain which would mean that any break in the weather, even if short, would reset the clock.
Parties should also consider whether the definition should deal with:
Please get in touch if we can help you with your strategy for managing inclement weather risk under a contract on a current project, or with considering alternative frameworks for new projects.
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Paul Calvert, Partner
Jim Demack, Partner