Force majeure is coined from a French term that refers to a ‘superior force,’ implying an ‘act of God.’ Force majeure refers to unforeseen, unusual, and extraordinary events that surpass the control of a person written in a contract that prevents a particular party from fulfilling an obligation under that contract. Generally, this event is something that a specific party in an agreement could not avoid or attribute to another party.
In managing construction, force majeure clauses establish which situations are considered force majeure, with associated recommendations on handling these circumstances. Some construction contracts deem force majeure a significant event that may grant the general contractor the ability to file claims on an extended timeline needed to deliver their agreed obligations under the contract.
While project owners usually agree with general contractors when they cannot execute their work appropriately when a real force majeure arises, problems arise when an owner suspects that the general contractor is claiming an unreasonable force majeure for monetary gain and when that event could have easily been predicted, moderated or avoided altogether. These claim disputes are common when it comes to unfavorable weather conditions as the term is mostly vaguely defined in the contract.
What Events Are Considered Force Majeure?
Although United States law doesn’t explicitly define the conditions that can be considered as force majeure, there are some widely used events that you can set out in your contracts.
The following events commonly fall under force majeure in construction:
a. “Acts of God”
This is the most widely used term used to reference. It implies natural incidents beyond human involvement and cannot be prevented with planning, foresight, or care. For instance, unexpectedly bad or dangerous weather conditions and environmental catastrophes like hurricanes, floods, fires, volcanic eruptions, and earthquakes. It may also include pandemics and epidemics.
b. Government Mandate
These are the uncontrollable or unforeseen changes to legislation and law. The most recent example of this would be when all companies and businesses, including the construction industry, were instructed by the government to halt operations on the onset of the COVID-19 pandemic.
c. Social, political, economic, or other individual or group involvement
These refer to rebellions, riots, wars, invasions, terrorism, industrial disputes, and strikes.
These are also usually accompanied in construction contracts by a catch-all phrase, as there will be other unforeseen circumstances that won’t necessarily fall into these generalized categories and are unrealistic to be listed in full.
What Events Aren’t Considered Force Majeure?
Generally, any disruptive event that could have been prevented with sufficient foresight and planning will not be considered a force majeure event.
For instance, during the onset of the COVID-19 pandemic, you may experience an employee needing to work from home. Although the said virus was initially not expected to reach the United States, it is now a well-known risk in other close countries. It is realistic to expect work disruptions and have good contingency plans, like alternate or skeletal staffing, when other workers need to self-isolate.
Some incidents may even fall under the commonly considered force majeure situations but are controllable and/or foreseeable. For instance, a forecasted typhoon that you knew was coming where your team could prepare sufficiently was not as destructive as expected.
Force majeure in construction also doesn’t cover unfavorable financial or economic conditions, like when the contract becomes unprofitable to finish. Some situations like this may be beyond your or your team’s control, such as an increase in the costs of certain building materials. But the work becoming financially difficult or unprofitable should not impede work from being carried out in the way that other force majeure events do. If necessary, alternative solutions can be made (e.g., getting another supplier or purchasing materials using credit). Furthermore, economic fluctuations are not surprising and could even change favorably for you.
Therefore, anything involving money would need to be addressed in the contract, but certainly not under the force majeure clauses.
Why Is Preparation for Force Majeure Events Important in Construction Industry?
As force majeures are as defined unpredictable, the best way to deal with them in the future is by preparing for any worst-case scenario that can unfold during construction operations. By being prepared, you can also mitigate related problems and prevent conflicts that may arise.
Unforeseen circumstances that emerge on a jobsite can be avoided, and the issues they may cause can be mitigated through better preparation in the following areas:
- Technical Plans
- Crew Schedules
Adequate preparation for force majeure when you manage construction projects allows you and your crew to pick up easily from where work was disrupted and continue your contract by extending the time. Nevertheless, being better prepared might mean continuing your work without even getting a time extension.
So how can a person prepare for unforeseen events? For instance, a strike has halted your construction or because civil unrest has caused unexpected traffic that your suppliers failed to deliver your building materials on time.
By having your whole crew communicate in one central place, you can update your suppliers and your on-site crews in real-time on which deliveries to expect and at what time. Furthermore, you can communicate with a specific worker responsible for receiving the building materials what time they need to be on site. Thus, mitigating any further delay and saving labor and time resources would no longer be required on that workday. Having the capability to gather all project stakeholders in one place ensures a proactive approach to construction crew management and constraint resolution.
What Steps Can You Take To Protect Your Construction Business?
Force majeure events need not cause disasters. Here are five proven ways to better prepare for any unforeseen scenarios.
1. Communicate With Your Stakeholders Before the Project Starts
Before starting your construction project, you should communicate the overall plan and timeline with every project stakeholder, including your preparation program and contract clauses dealing with specific circumstances that may arise. Establish a collaboration and communication protocol that would make it easy for your project’s stakeholders to access the latest files and documents.
2. Be Specific in What Events Will Constitute as Force Major in Construction
As a construction manager, you need to be overly specific with the details involving situations that fall under force majeure during your operations. As these events tend not to be usually vague, it is best to include parameters and a matrix that can help stakeholders verify whether a ‘force majeure’ circumstance is genuine or not. Always remember to have instructions on how respective specific should be handled.
3. Connect All Project Stakeholders Around a Live and Sharable Program
Connecting your team members and subcontractors in a real-time platform gives you the advantage of mitigating potential risks associated with an unpredictable event. Every construction team member is kept on the same page while allowing them to access any changes in real-time, giving each one the flexibility to adjust the course of actions as they happen. Having teams connected to the updated project information through software designed for project management for construction allows you to make faster and better decisions. Mitigate the risks of unforeseen events with Pro Crew Schedule, and keep your data communication accurate and updated all the time.
4. Standardize Business Processes and Systems
Standardize your work process, standardize your documentation, standardize your communication, and quickly evaluate your data insights so you can apply your best practices to your upcoming projects. By standardizing as much as you can in your business, you collect valuable construction data that you can learn from, analyze, and improve on. You can then align your project systems and optimize your workflows across all your projects. This enables accurate estimations to avoid possible risks and predict unforeseen scenarios, protecting your business from surprise costs, downtime, delays, and disputes down the line.
5. Consolidate Schedules Through Integrated Planning
Having your short-term construction schedules integrated into the overall timeline gives you complete visibility and control to manage construction priorities. This schedule transparency allows you to improve project task management. Moreover, this will help you understand what is currently happening in the project. In whatever unforeseen event, you’re always one step ahead and prepared to solve issues before they can snowball into something damaging. Predict events you can think of, identify potential problems, and avoid impacting your schedule and budget. Avoid surprises with better visibility and project control.
Protect your Construction Project from Force Majeure
As a construction manager or just any, it is essential at the beginning of any project you carefully review your construction contract and, if possible, with the help of a lawyer. Determine your obligations and rights regarding the project and in the context of potential force majeure situations. This information should guide your team on what to prepare for and look out for to prevent claim disputes.