Local construction projects are being impacted by indefinitely delayed shipments of construction material due to the coronavirus.

This is according to Natalie Reyneke, a director at MDA Attorneys.

“Our clients are receiving delayed shipment notices that indicate cancellation of shipments, with calls for patience from customers as China does its best to fight the epidemic. In times of such uncertainty, we advise proactively mitigating possible damages,” Reyneke on Tuesday.

As a result of this, South African contractors are said to be “sharpening up” on the terms of their contracts and the financial impact the virus could have on projects in South Africa.

Contracts typically place the risk of material delivery and delays on contractual completion times squarely on the shoulders of contractors.

She notes that contractors may, however, have a reprieve if their contracts have adequate provisions to allow for time extensions.

“The impact of the virus may be a force majeure event – an unforeseen circumstance that prevents either of the parties from fulfilling their obligations under the contract. Two of the standard form construction contracts also allow for time extensions when contractors cannot obtain materials or there is a shortage as a result of an unforeseeable epidemic,” she said.

Cost implications of project delays

Project delays have significant cost implications. When an event occurs that is beyond the control of the parties, they usually share the risk.

Then a contractor would bear the monthly expense of being on site for longer than expected if there are delays, and the project owner would take the risk of other costs and expenses incurred due to late project completion.

To avoid delay damages, contractors need to ensure that they quickly identify possible contractual remedies and submit required notices in terms of their contracts, or they could find themselves losing millions due to the viral outbreak.

“Our clients are receiving delayed shipment notices that indicate cancellation of shipments, with calls for patience from customers as China does its best to fight the epidemic. In times of such uncertainty, we advise our clients to ensure that they proactively mitigate possible damages,” said Reyneke.

Travel industry affected

The country’s travel industry has also been impacted by increasing reports about the spread of Coronavirus, raising concern among South African travellers about travelling internationally. 

Members of the Association of Southern African Travel Agents (Asata) confirm in a statement that leisure travel, in particular, had been affected as holidaymakers chose alternative destinations to Asia, deferred their travel or cancelled their travel plans.