Australian Governments at all levels recognise that climate change is occurring. The NSW Government has gone so far as to publish a set of Climate Risk Assessment Guidelines.
You may have seen a requirement to take the guidelines into account included in your most recent NSW Government transport contract. Does inclusion of the guidelines in design and build contracts mean that the design needs to take into account climate change, effectively passing the risk of climate change onto the construction contractors?
It seems counter-intuitive that a Government would:
- recognise the risk of damage and consequent costs of climate change occurring;
- be the party that is in the best position to be able to take steps to mitigate the risk of climate change occurring; and
- seek to transfer to the construction contractor, the risk of damage and costs arising from climate change, whatever they might be.
The cost to a construction contractor of accepting such a risk is unknown.
Construction contractors should strongly reject any attempt by Governments to pass through Climate Change Risk. Climate Change Risk is a sovereign risk. The Government (and not construction contractors) are best placed to be able to do something about this risk.
I’d be interested in your view on this relatively new area of the law, and please do get in contact with me at email@example.com if you would like to discuss any other aspect of risk allocation in your construction contract.
Simon Fosterling is a Group Principal and a senior member of the construction and infrastructure team. If you have any questions, contact Simon via email firstname.lastname@example.org or phone +61 (2) 9016 0141
This article was first published on LinkedIn
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