The Building Engineering Services Association (BESA) is calling on contractors to review their contracts so supply chains can work together to manage delays to projects during the coronavirus (COVID-19) crisis.
Many sites are being shut down in response to government calls for non-essential work to be paused and the Association praised the way firms were working together to manage this unprecedented interruption to business.
BESA’s Legal and Commercial Director Debbie Petford said firms should “confirm the correct method for notifying delays under the terms of their contract”. She added that many contractors were now entering into deeds of suspension with their clients where both parties agree to suspend their obligations and work out how to apportion risk.
There have been some reports of sub-contractors facing threats of fines and penalties if they don’t turn up for work and BESA Chief Executive David Frise has called for that to stop.
He said: “We are bound to see some examples of bad behaviour, but overwhelmingly we are seeing the best of people during this crisis. Supply chains are working together to get through it and to ensure that projects can quickly get back up to speed when the crisis is over.”
Some workers said they were facing social media shaming for travelling to work despite the government’s instruction that essential sites should remain open – and many are supporting critical building and infrastructure projects. BESA is working with the umbrella body BuildUK to ensure the general public is more aware of why certain workers are still travelling.
However, a large number of contractors now report that around 75 per cent of their work is now suspended with others saying they expect to be fully shut down by the end of the week. This raises the question of how companies can access business interruption loans with many concerned they were being asked by some of the banks to supply security that could put them at future financial risk.
The Chancellor Rishi Sunak confirmed that the government was supporting interest-free loans of up to £5 million for 12 months to help see firms through the crisis, with banks covered for up to 80 per cent of the losses if the businesses are unable to repay.
However, it has been reported that some banks are intending to charge interest on the loans and requesting personal guarantees from business owners. Petford advised BESA members not to give personal guarantees that could put their assets at risk if there was a problem with repaying the loan. She said banks were not allowed to use someone’s main residence as security, but may ask for stocks and shares.
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