Force Majeure Project Impacts

Key Advice Amid COVID-19

COVID-19 (coronavirus) is, first and foremost, a public health emergency of enormous proportions. The humanitarian cost to our communities, our country and the world is vast and still rising. While safety and healthcare threats must come first, economic concerns follow shortly after that, as we all seek to minimize the impact on our businesses and our economy. The construction industry faces extraordinary unknowns regarding operations, revenue, contract obligations, timely project delivery and project suspensions or shutdowns. Both project owners and contractors will look to mitigate and recover the costs associated with these impacts.

Force majeure clauses are common and important clauses in the construction contracts that require careful consultation with appropriate legal counsel. Further, these clauses, depending on the contract, may have strict notice provisions and requirements to quickly assess the impact to your project delivery time and budget. FTI Consulting’s Construction Solutions practice provides assistance to help project stakeholders navigate force majeure clauses in response to COVID-19, including evaluation of the following issues and important considerations:

Is the force majeure event suspension of the work? It depends. Force majeure events and their consequences are strictly dependent on how they are defined in your specific contract. FTI Consulting's can assist in a review of your contract to identify the following:

An owner’s or contractor’s expressed and implied duties
A subcontractor’s duties, such as notice, estimates, updates and mitigation efforts
Rights and obligations with respect to off-site vendors
Evaluation of available options for moving forward with the existing parties