Paul Watson

How to manage critical issues that may arise from mothballed sites



The current events surrounding the implications of Covid-19 will mark an epoch in the history of the global economy.

There will be far reaching implications which will cover every corner of the planet and, unfortunately, the property markets and construction sites will be impacted.

As a flexible lender in the process of growing our business, we are here to support new borrowers and/or brokers, those we are in detailed discussions with about new deals, and our existing partners already sitting in our loan book. 

The relationship between Covid-19 and construction is in a rapid state of flux. Lenders, developers, contractors and sub-contractors all need to work very closely together to ensure that projects are stabilised as much as possible. Clearly, there will be pain for all parties, but we firmly believe that the closer we all work together with strong communication links between all stakeholders involved in a project, then the less chance of exposing any risks.

There has been ambiguity from central government as to whether construction sites should and will remain open, with various companies interpreting the advice to best suit their business objectives. While we are clear that public health is of the utmost importance, clearly there is a responsibility to businesses to ensure this ride is as smooth as possible.

Although some developers and contractors have taken the decision to close sites, there is a clear reluctance from sub-contractors to be exposed to close working conditions on site, yet they are unable to do so because of the financial implications involved. Government measures to assist the self-employed will likely result in less sub-contractors turning up to work. A corollary of this is that it will become increasingly likely that the main contractor will have to close the site. To compound this, we see a shortage in availability and the price of materials as a significant short-term risk.

Critical issues arising from mothballed sites and how to manage them:

  1. Health and safety — it is critically important to ensure that sites are safe and there are no risks to the public. It would be worthwhile for the principal contractor to contact neighbouring owners to ensure if there are any issues during site closure then those most exposed can flag the issues directly. 

  2. Security — ensure that the site is secure and record this with photographic or video evidence. Confirm with the contractor that all required insurances remain valid during the period of closure. Inform everybody involved in the project of the closure and circulate emergency contact details to all parties. These contact details should be included on site.

  3. Valuation and current state of works — make sure that any monitoring is done as closely as possible to the site closure date to obtain an accurate physical inspection of the project for loan draw down. The photographic and video evidence will allow a monitoring surveyor to value works completed that they haven’t been able to physically inspect. This evidence should include materials on site. 

  4. Remaining programme — an updated plan, with fluid dates, should be circulated so that all parties can forecast future workloads and timing implications.

Once sites are able to reopen, then all parties should attend at first access to ensure that a collaborative reopening of the project is undertaken. This should include developer, main contractor, sub-contractors and lenders and, again, a photographic and video record taken.

In summary, during these unprecedented and difficult times, we believe that the key part of a successful conclusion to all projects will be close collaboration between all parties, with clear communication during the process involved in closing and reopening sites. 


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