Responding To Supply Chain Disruption In The Construction Sector

• Published date: 01 June 2021
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Coronavirus (COVID-19), Contracts and Commercial Law, Construction & Planning, Litigation, Contracts and Force Majeure
• Law Firm: Walker Morris
• Author: Mr Nick Lees, James Crayton and Chris Woodthorpe

Supply chains in the construction sector are coming under pressure with increased price inflation and scarcity of products including roof tiles, steel joists and timber caused by a combination of factors arising out of Covid, Brexit and the March 2021 Suez Canal blockage. It is likely that the impact will continue to reverberate through supply chains at a time when construction activity is buoyant across the UK.

How can Walker Morris help?

Whilst the factual context of recent global events impacting supply chains and the scale of disruption may be extraordinary, the legal and practical implications of adverse events on businesses in the construction sector are not. Walker Morris have expertise in helping businesses operating in the construction sector to successfully navigate through supply chain challenges by providing key legal and commercial support to assist with avoiding disputes and keeping supplies moving. Please do not hesitate to contact us to discuss solutions to any supply chain issues you may be experiencing. Issues for businesses to consider including the following.

How should affected businesses respond?

• Producing and implement crisis plans to come into operation where critical supplies run short.
• Consider how best to deal with commercial counterparties and potentially also financial creditors, particularly where an event has resulted in contractual and/or financial breaches or default.
• Address building-in resilience, for the future. Commercially that can involve
  • 'shoring-up' inventory (and not operating a 'just-in-time' supply chain), which may have an impact for logistical arrangements and storage capability;
  • reducing or removing over-reliance on any one source or country of origin for vital supplies; and
  • considering 'on-shoring' or 'near-shoring' supply chain components where possible.

What legal and practical advice arises?

As part of a business' assessment of supply chain disruption on their commercial arrangements and financial viability, whether or not contracts or common law remedies allow the flexibility to renegotiate, or the ability to terminate, commitments will be key; as will the ability to avoid or mitigate disputes.

The following checklist of legal and practical advice should assist.

• Undertake a review of all key contracts to determine where contracts (and commercial relationships) might allow for flexibility and the ability to negotiate to 'ride out' a crisis, and where pressure points or breaking points arise. Where...