Project owners are bearing most liability for COVID-19 added costs and time delays, say global contractor and client respondents in a new survey by UK-based project consultant Turner & Townsend, with half reporting an increase in contractual disputes since the start of the pandemic.

The survey of 90 owner and contractor managers, conducted in December, did not specify a percentage for the owner liability "majority" figure and also did not break down respondents' base countries or market sectors.

According to the consultant, one-third of respondents said their contracts were not set up to address the effects of COVID-19 events – partly due to the interpretation of liability for unforeseen events and reliance upon force majeure clauses

The findings highlight a clear need for greater clarity over contract terms, said Turner & Townsend, noting that 83% of respondents reported a pause or temporary site closure because of COVID-19, and 72% reported reduced productivity on projects compared to pre-pandemic levels

Respondents split evenly as to whether COVID-19 led to more contract disputes, with 63% reporting the need to seek contractual guidance from government officials due to uncertainties. About 49% report they are adding up to 10% extra for COVID-19 related costs in bid submissions.

Nearly one year into the pandemic, “we still do not have enough clarity on the liability within construction contracts,”  says Nick Jones, Turner & Townsend associate director for contract services. “This needs to be addressed, and quickly," he adds, particularly with new projects moving forward as nations push for economic recovery.

"If 2020 has taught us anything, it is that all parties will now want to ensure clarity for COVID-19 event liability through the drafting of expressly worded contract terms, he says, and that owners “ may also be looking to address the current imbalance of risk and responsibility for the future.

The issues come as UK construction sector growth fell 12.5% last year due to the pandemic, with December output down for the first time in seven months, according to new government statistics. The overall UK economy dropped by a record 9.9% in 2020.