CLIMATE CHANGE AND ITS EFFECT ON CONSTRUCTION CONTRACTS AND DISPUTES[1]
INTRODUCTION
The construction sector is growing at unprecedented rates. It is estimated that during the next forty years, 230 billion square meters of new infrastructure will be built globally.[2] At the same time, climate change is a challenge for the industry and society as a whole. This winter in Johannesburg we have seen snowfall for the first time in 11 years. At the same time, in Death Valley California, the highest temperatures ever have been recorded. Residents in Europe have been told to stay indoors due to exceptionally high temperatures.
The challenge can partially be solved by mitigation and adaptation. This can be attained through economic and political interventions around the world from both the private and public sector. Businesses, governments, investors, and society as a whole need to work together to harness bold new ways to accelerate the race to zero, and tackle climate change head on. With construction activities identified as one of the biggest impacts on the environment, the industry is under pressure to clean up its act.[3]
Alongside changes in the global climate landscape, come potential changes in construction disputes. Are we likely to see an increase in climate-related disputes and cost/time issues because of climate change? Will arbitrators and those involved in the resolution of disputes need to consider new factors in the dispute resolution process?
SOLUTIONS TO THE CHALLENGE?
One solution may be through a global integration of will and skill from both the private and public sector. Businesses, governments, investors, and society must work together to harness ways to speed up the race to net-zero.
A systematic review of available tech and strategies to achieve zero-energy buildings is becoming a norm worldwide. The aim is to contribute to climate change mitigation options for buildings. Strategies of adaptation to climate change include installation of water reticulation systems, renewable energies, and the integration of vegetation. The circular economy is also rapidly becoming recognised as an integral part of this[4] process.
However, with a few exceptions, it seems common ground that climate change is something that must be tackled. Extreme weather events are certainly becoming more common. So, what are the practical impacts on construction operations? And what contractual issues need to be considered?
CLIMATE CHANGE: IS CONSTRUCTION THE PROBLEM?
Climate change[5] has been described as the most severe challenge facing us in the 21st century.[6] There are many factors attributed to climate change worldwide, these include carbon dioxide (CO2), methane, nitrous oxide, and fluorinated gases.
Climate scientists predict that global warming[7] will occur with more severity in future.[8] This is mainly attributed to human or anthropogenic activities, such as energy production and consumption and activities such as construction and mining.
Current regional policies and practices in industry are likely to only be partially effective in reducing predicted emissions growth. Emission reductions across industry worldwide are also key.[9] Angela Merkel noted that ‘Climate change knows no borders. It will not stop before the Pacific islands and the whole of the international community has to shoulder a responsibility to bring about sustainable development.’[10]
CLIMATE CHANGE WORLDWIDE
The United Nations Framework Convention on Climate Change (UNFCCC) differentiates between developed and developing
countries.[11] As such, developing and developed countries share differing obligations on emission reduction.[12] Under the UNFCCC, developed countries are primary contributors to greenhouse gas emissions, following two centuries of industrialisation.[13]
As developing countries, South Africa and others are considered significant contributors in terms of global emissions.[14] Developing countries’ contribution to greenhouse gas (GHG) emissions is less than that of developed countries. Yet they suffer more of the devastating effects of climate change.[15] This is because of absent institutional, economic and financial mitigatory mechanisms.[16]
The Intergovernmental Panel on Climate Change (IPCC) outlines the conditions needed for a country to have a high adaptive capacity. It indicates that each country must have:
- A stable and prosperous economy.
- A high degree of access to technology at all levels.
- Well delineated roles and responsibilities for implementation of adaptation strategies.
- Systems in place for the national, regional and local dissemination of climate change and adaptation information.
- An equitable distribution of access to resources.[17]
The United Nations Secretary General, Mr António Guterres, stated that ‘… the world is way off track’ and that it is not acting consistent with the targets in the Paris Agreement.[18] There are two main uncertainties in assessing future climate, which are trajectories of future emissions of greenhouse gases, and aerosols and the response of the global climate system to any given set of future emissions.[19] In 1992, member states of the United Nations (UN),[20] adopted the UNFCCC. The aim is to propel the stabilisation of greenhouse gas concentrations in the atmosphere at a level that will not be harmful to humankind.[21]
THE INEVITABLE IMPACT OF WEATHER
Having established the risks and what is needed to improve the industry, how might we tackle the immediate and perhaps inevitable challenges facing construction? Weather is likely to be the single biggest issue projects face as a result of climate change.
We can almost guarantee that most construction projects will be impacted by inclement weather. In most cases, this should not be an excuse for delays. However, increasing numbers of projects seem to be interrupted by extreme weather events. Events which could not have been foreseen.
But we can prevent, or at least mitigate many of the delays by understanding the weather patterns in the area. Allow for these expected weather disruptions in the construction schedule.
Careful planning can mean that weather-dependent activities are scheduled for times when better weather can be expected. We can also implement mitigating measures to reduce the damage and return the project to full production as quickly as possible.
Contractors should not be expected to shoulder the responsibility of extreme weather events or those that could not have been reasonably expected. They should therefore be cautious in accepting contracts where they could be liable for these delays.
MANAGING THE RISK OF CLIMATE CHANGE ON DELAY AND DISRUPTION
Many countries in Africa and around the world experience two rainy seasons. The major rainy season takes place roughly from April to June. A shorter rainy season runs from October to December. The rainy period of April to June is wet and humid, making coastal areas unpleasant. Sometimes it pours for several hours non-stop with fierce wind and storm. At other times it drizzles for prolonged periods.
Rain is expected to get heavier in the coming months and years. This means construction sites will be consistently hit by rain and wind. In turn, this causes disturbance, forcing construction workers to abandon projects, damaging property and materials, and leads to delay in completion. What was previously exceptional weather, may in future become the norm. What was previously a one in two-hundred-year event may become more frequent.
Rain can also have a significant impact on the health of workers, certain equipment (like cranes) cannot be used because of high winds. Muddy construction sites make movement difficult for heavy machines. Activities such as roofing can be delayed because of wind or heat.
Therefore, a lot of planning must be carried out by construction companies to forestall these negative impacts. Be proactive in getting your construction site ready for the rain. Though it is not possible to predict the nature of rain and storm, you can protect your site, project, and materials by securing the materials and equipment on site.
Contractors often place the blame on clients for unreasonable construction schedules. They say it is impossible to allow additional time for delays caused by rain. However, average rainfall will almost certainly occur. Knowingly accepting a schedule (and the associated risks) that does not allow for usual weather conditions in that region while you are constructing the project will inevitably lead to problems.
TACKLING THE WEATHER
There are a number of measures contractors can take. These should help to mitigate some of the delays caused by bad weather. They include:
- Understand expected weather conditions at the project location.
- Understand contract documents. Know what they say about the risks of inclement weather and, in particular, what is stipulated about unseasonal and severe weather conditions. In some circumstances contractors may decide to exclude weather conditions which are worse than the norm from the bid price.
- Allow for the costs and delays of the normal weather patterns.
- Discuss some of the issues relating to the weather with parties to the contract.
- Schedule activities that can be impacted by rain, such as earthworks, to occur outside of the rainy season.
- Close up buildings ahead of the rain season or cold weather.
- Schedule activities such as roofing and lifting large loads to happen outside the windy season.
- Consider alternative construction methodologies. This might even mean redesigning structures.
- Modify construction working times.
CONTRACTS AND LIKELY DISPUTES
There are also many events that may trigger a compensation event or entitlement to extra time to complete a construction project. Such events could include rain, extremes of heat or cold, hurricanes, cyclones and tornados, lightning and wind generally.
Different contracts have different requirements for demonstrating that weather events lead to an entitlement for more money or more time to complete. Some will rely on a specific clause or reference point, while others may be a little vaguer.
Taking, for example, some of the common regional and international contracts:
- FIDIC states that adverse weather, shall mean ‘adverse climatic conditions at the Site which are Unforeseeable having regard to climatic data made by the Employer … and/or climatic data published in the Country for the geographical location of the Site.’ Therefore, if seeking to prove entitlement due to adverse weather, you would need to ensure you have access to the relevant data. You will need to demonstrate that the weather you experienced did not conform with the norms of your project’s region.
- In contrast, under NEC, weather can only be classified as ‘adverse’ if it occurs less than once in ten years within one calendar month. Again, to demonstrate entitlement, you would need accurate records demonstrating that you experienced such a fluctuation.
- The JBCC contract form has the following in its advisory note: ‘adverse weather’ relates to a climatic condition that inhibits progress towards practical completion. Therefore, it could include light overnight rain that affects excavation work in foundations or on high-rise structural steel components that may become slippery and dangerous to work on. On the face of it, this seems to be a very broad definition and one that might create scope for disputes.
CONCLUSIONS
In conclusion, it seems climate and weather patterns are inevitably set to change. This will almost certainly impact the nature and frequency of disputes where the cause is that of adverse or unusually adverse weather. Those involved in construction will need to be alive to the challenges posed.
Those involved in the resolution of disputes will equally need to be aware of the change landscape and ready to assess or analyse such matters. It is critical that those involved in construction also ensure that climate-related risks are managed carefully in the contract and that they understand where liabilities lie when entering into construction contracts.
[1] Damian James and Marcia Davids of Damian James Delay & Quantum Experts are the authors of this article.
[2] L Fernández, R Yurivilca, L Minoja ‘Buildings vs. climate change: Building adaptation and mitigation’ (2019) available online at https://blogs.iadb.org/sostenibilidad/en/buildings-vs-climate-change-building-adaptation-and mitigation/#:~:text=Mitigation%20strategies%20for%20climate%20change,facilitate%20the%20use%20of%20non%2D (Visited 6 May 2023).
[3] https://www.willmottdixon.co.uk/asset/9462/download (accessed 17 July 2023)
[4] https://www.rolandberger.com/en/Insights/Publications/It%E2%80%99s-time-for-construction-to-embrace-the-circular-economy.html
[5] See The United Nations Framework Convention on Climate Change ‘Fact sheet: Climate Change Science – The Status of Climate Change Science Today‘ (2011) 1. According to the United Nations Framework Convention on Climate Change, 1992 (UNFCCC), climate change refers to ‘a change in the state of the climate that can be identified (e.g., using statistical tests) by changes in the mean and/or the variability of its properties, and that persists for an extended period, typically decades or longer. It refers to any change in climate over time, whether due to natural variability or as a result of human activity’. See too Article 1 of the UNFCCC; see further Intergovernmental Panel on Climate Change ‘Climate Change 2014 Synthesis Report’ (2014) at pp. 39 – 54.
[6] G Feulner Global ‘Challenges: Climate Change’ (2017) 1 (1) Global Challenges 5-6 available online at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6655347/ (Visited 20 June 2021).
[7] Ed M Anderson ‘Global Warming’ 10, Britannica Educational Publishing, (2012).
[8] See Intergovernmental Panel on Climate Change n 1 above at pp. 40 – 54
[9] D Kupfer and R Karimanzira ‘Agriculture, Forestry, and Other Human Activities’ (1990) Climate Change IPCC Response Strategies 78.
[10] Quote from A Merkel available online at –
https://www.brainyquote.com/quotes/angela_merkel_759179?src=t_climate_change (visited on 25 July 2021).
[11] See Article 3.1 of the UNFCCC; M Betsill et al ‘Building Productive Links between the UNFCCC and the Broader Global Climate Governance Landscape’ (2015) 15 (2) Global Environmental Politics at pp. 1-10.
[12] As above.
[13] Preamble of the UNFCCC.
[14] Department of Environmental Affairs National Climate Change Response White Paper (2011) at p. 26.
[15] S Huq et al ‘Mainstreaming adaptation to climate change in least developed countries (LDCs)’ (2003) Russell Press 6.
[16] As above.
[17] The Intergovernmental Panel on Climate Change ‘Impacts, adaptation and vulnerability Contribution of Working Group II to the 3rd Assessment Report of the IPCC’ (2001) in Chapters 10, 11, 17 and 18.
[18] A Guterres ‘Remarks to the Nordic Council’ (2020) available online at –
https://www.un.org/sg/en/content/sg/speeches/2020-10-27/remarks-the-nordic-council (visited 12 July 2021).
[19] GA Meehl et al ‘Global climate projections, in Climate Change 2007: The Physical Science Basis—Contribution of Working Group 1 to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change’ (2007) Cambridge University Press at pp. 747–843.
[20] See information available online at https://www.un.org/en/our-work (visited 25 July 2021).
[21] The UNFCCC was adopted on 19 May 1992 in New York and entered into force on 21 March 1994. It currently has 197 Parties.
