Adapting the standard forms of contract to minimize the contractual effects of COVID-19 on construction projects

Abstract

The construction industry is a major economic driver in Sri Lanka. However, the construction industry was significantly affected by the responses made by the Sri Lankan government to prevent the spread of the COVID-19 pandemic. The effects of those government responses on construction projects are diverse as time, cost, and qualityrelated impacts. These effects resulted in numerous contractual effects that were mostly to be dealt with reference to the provisions made in the standard forms of contracts such as ICTAD/SBD/02 and FIDIC 1999 in Sri Lanka. Since no similar pandemic has affected Sri Lanka at this magnitude before, neither ICTAD/SBD/02 nor FIDIC 1999 have been drafted giving due consideration to such exceptional circumstances. Furthermore, no studies that researched these kinds of aspects can be found in the existing literature. Hence, this research aims to explore the effects of the responses made by the Sri Lankan government to prevent the spread of the COVID-19 pandemic on the construction industry and the possible adaptations of standard forms of contracts to address the contractual implications of those effects to mitigate the effects on the contractual parties in both building and civil engineering projects. A desk review was carried out to identify the existing provisions of ICTAD/SBD/02 and FIDIC 1999 to overcome the effects of pandemic situations, and three case studies, including two building projects and one civil engineering project, were used for the empirical data collection. Representing contractors, consultants, and employers, twelve semi-structured interviews were conducted within the three case studies. The research findings reveal that a collaborative approach with cost and time-sharing is the best approach to address the effects of a pandemic situation. Furthermore, defining terminologies, developing transparency in contractual relationships, and establishing an equal assessment basis can all aid in the contractual development of the ICTAD/SBD/02. As a result, the study suggests improving documentation practices, developing guidelines for amicable settlement, and eliminating the adversarial effects of ICTAD/SBD/02 through an equal assessment process. Thus, this research contributes to the further development of ICTAD/SBD/02 while also improving Sri Lankan building and civil engineering projects by reducing contractual issues in future pandemics.