Construction at health sites managing the risks and disruption
It is not uncommon for refurbishment or other construction works to be undertaken on a site (or within a building) which continues to be open for business. It is important to ensure construction is carried out in a manner designed to:
- cause minimal disruption to ongoing business operations;
- minimise inconvenience to tenants, staff, customers and other invitees to the building (Visitors); and
- prioritise the safety of all Visitors.
Although ensuring disruption is minimised during a construction project is important for all commercial enterprises, it is critical for hospital, aged care and other health related sites (Health Sites). Contractual provisions which may be suitable for other commercial buildings may not be adequate for a Health Site.
Health Site Risks
Health Sites are inherently risky and disruption requires more consideration than is normal for a commercial operation. Health Sites require more consideration as:
- they are frequented by people with severely hampered immune systems who may be particularly vulnerable to airborne contaminants, dust and noise. This gives rise to an increased risk of infection and an increased requirement for dust and airborne materials control. This may be dealt with by including air tight barriers between occupied and construction spaces and air handling design based on a staged construction sequence, with clearly separate zoning. A regime of air sampling and surveillance may be required to access and monitor the environment allowing appropriate controls to ensure safe clinical areas are maintained;
- the medical instrumentation present at Health Sites may be sensitive and damaged easily by vibration, dust or other construction issues. We are aware of one instance where construction activities tripped the sprinklers at a hospital and caused the flooding of a tenancy, ruining research and medical equipment; and
- maintaining the power supply to the Health Site at all times is critical.
In a hospital scenario the disruption risk may be increased as the hospital operator may have multiple leases with health service providers (for example medical imaging, pathology, consulting surgeons etc…). A significant disruption could put the operator in breach of each of those leases and lead to many claims and consequential loss. It is important for the hospital operator to mitigate these risks as much as possible and transfer some of the risk to the Contractor.
Mitigating Risks – Construction Contract
Risk in a works project is generally dealt with through the mechanism of the construction contract. Ordinarily the operator of the Health Site will be the Principal under the construction contract. The construction contract should deal specifically with disruption and ensure the Principal is protected as much as is possible.
It is worthwhile including a clause in the construction contract which specifically provides the Principal with control over how and when works may be carried out to minimise disruption and risk to Visitors. The clause should include an obligation on the Contractor:
- not to disrupt any services to the Health Site without the prior consent of the Superintendent or Principal;
- to seek the Superintendent or Principal’s consent prior to performing any work which has the potential to adversely impact the operation of the Health Site;
- to restrict work involving substantial noise, vibration or dust to specific working hours approved for that purpose;
- not to undertake any work which will produce dust or other airborne contaminants unless it has received written approval of the Superintendent or the Principal as to the time, approach and location of that work.
It is also prudent to insert a general obligation on the Contractor not to disrupt the Health Site.
The Principal may also wish to consider quantifying the likely damage due to disruption of a portion of the Site and agreeing the inclusion of a liquidated damages type provision in the Contract. This clause may require the Contractor to pay a daily damages rate, on a per ward or per tenancy basis, to the Principal for each day in which normal operations cannot proceed. Any damages would need to be calculated carefully and be a genuine pre-estimate of the likely loss to be suffered by the Principal if disruption occurs.
These steps should ensure the Contractor proceeds in a manner least likely to disrupt the ongoing operations of the Health Site.
If you have any queries about projects for Health Sites or disruption clauses, please contact John O’Kane.
You might be also interested in...
Property & Projects | 5 Apr 2016
The Conveyancing Amendment (Sunset Clauses) Act 2015 (NSW) (Sunset Clauses Law), which came into force on 2 November 2015, limits a developers ability to rescind an off the plan contract of sale pursuant to a sunset clause. The Sunset Clauses Law introduced division 10, section 66ZL of the Conveyancing Act 1919 (NSW) (Act).
Property & Projects | 7 Apr 2016
The importance of being “ready and willing”: a lesson to all vendors when seeking to terminate a contract
A recent decision handed down in the Court of Appeal, Supreme Court of New South Wales, Barrack Corporations Pty Limited v Jaswil Properties Pty Limited  NSWCA 32, held that a vendor could not rely on its Notice to Complete to terminate a contract for sale unless they were “ready, willing and able to pass legal title” at the time specified for settlement.