Coronavirus hits South African construction firms
CAPE TOWN – Local construction projects are being impacted by indefinitely delayed shipments of construction material due to the Coronavirus.
Local construction and technology law firm MDA Attorneys said in a statement that as a result, South African contractors were sharpening up on the terms of their contract and the financial impact that the virus could have on projects here.
MDA Attorneys director Natalie Reyneke said on Tuesday that contracts typically placed the risk of material delivery and the resultant delays on contractual completion times, squarely on the shoulders of contractors.
“However, contractors may have a reprieve if their contracts have adequate provisions to allow for time extensions. The impact of the virus may be a force majeure event – an unforeseen circumstance that prevents either of the parties from fulfilling their obligations under the contract.
“Two of the standard form construction contracts also allow for time extensions when contractors cannot obtain materials or there is a shortage as a result of an unforeseeable epidemic,” she said.
Project delays have significant cost implications. When an event occurs that is beyond the control of the parties, they usually share the risk, according to MDA Attorneys.
“What this means is that a contractor would bear the monthly expense of being on-site for longer than expected if there are delays, and the project owner would take the risk of other costs and expenses incurred due to late project completion. In other words, if the contractor has to be granted an extension of time to complete the project, the project owner cannot levy delay damages against the contractor for that extended time,” reads the statement.
To avoid delay damages, contractors need to ensure that they quickly identify possible contractual remedies and submit required notices in terms of their contracts, or they could find themselves losing millions due to the viral outbreak.
“Our clients are receiving delayed shipment notices that indicate cancellation of shipments, with calls for patience from customers as China does its best to fight the epidemic. In times of such uncertainty, we advise our clients to ensure that they proactively mitigate possible damages,” said Reyneke.
The country’s travel industry has also been impacted by increasing reports about the spread of Coronavirus, raising concern among South African travellers about travelling internationally.
Members of the Association of Southern African Travel Agents (Asata) confirm in a statement that leisure travel, in particular, had been affected as holidaymakers chose alternative destinations to Asia, deferred their travel or cancelled their travel plans.
Asata chief executive Otto de Vries said travel suppliers such as cruise lines, airlines and tour operators had implemented proactive measures, such as rerouting itineraries, cancelling flights to affected areas, increasing their health precautions and enforcing travel restrictions to mitigate the risk of contracting the virus.
“In some cases, cruise lines and airlines are waiving their cancellation and change penalties outright to accommodate passengers who choose to cancel or defer their travel plans. There is no question that there will be an impact to the outbound travel sector as the wider public gets to grips with how and where the virus is spreading,” de Vries.
The National Institute of Communicable Diseases (NICD) advised the industry that, while travellers should think twice about travelling to China, travel to other destinations should be fine provided the necessary precautions were taken.
“As a travel association, it is incumbent on us to ensure that our members, which represent over 90 percent of South Africa’s retail travel sector, are informed proactively by reputable sources what the situation is on the ground, not what is necessarily being disseminated online. This is so that in turn they can advise their customers, who can then make an informed decision on whether or not to travel, or where they will travel to,” said de Vries.
“We have seen in the last week alone, media reports and social media posts highlighting that South Africa has its first Coronavirus cases, only to be informed directly by the NICD that this is fake news. It is our responsibility as the travel industry to ensure we are advising our customers proactively and accurately, to the best of our ability, about what the actual situation is on the ground.”
Asata members also advised travellers, who chose to travel, to ensure they had the right travel insurance and to know what their policy included so that if they needed to cancel or defer their travel, they were covered appropriately.
South African travellers, who are returning from their holiday or business trips, can be assured that currently there are no travel or trade restrictions to South Africa, and that any passenger found to be ill or exhibiting fever symptoms on arrival will be reviewed at airport clinics.