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The Middle East conflict: how it could impact construction and how to be prepared
Anjali Shrivastava Michael Gerard Solicitors
With events in the Middle East triggering the grim prospects of product delays and inflation, Anjali Shrivastava advises careful checking of construction contract terms.
Oil shipments may be affected by the Middle East conflict. Image: Dreamstime
Just as the UK construction industry was hoping for glimmers of light at the end of the economic tunnel, the industry must now brace itself for another new uncertainty: the Middle East conflict.
It remains uncertain how long it will last. But it may have a significant impact on the built environment sector.
The industry is heavily reliant on oil. This includes day-to-day deliveries, moving raw materials, waste disposal, operating heavy machinery, use of plastic and other oil-based goods, plus construction materials that are highly energy‑intensive to manufacture.
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Historically, oil crises have triggered significant material price inflation in construction. With sharp increases in materials prices, delays in shipments and rising borrowing costs, contractors and employers are likely to try shifting the risk burden to one another.
This could crystallise into disputes over variations, price escalation, extensions of time and liability for delays.
What should parties with ongoing contracts be doing right now?
For those with ongoing contracts, it would be wise to review them to understand how risk is allocated.
Under a JCT, contractors should immediately review the relevant events clause (clause 2.29 in JCT SBC/AQ 2024; similar clauses exist in other versions), to understand whether delays linked to disrupted supply chains, long lead items, or government actions could entitle them to an extension of time.
It is equally important to comply with the notice provision (clause 2.27 of the JCT SBC/AQ 2024, for example): setting out the “material circumstances” of the delay, provided they use “best endeavours to prevent delay” (clause 2.28.6.1 of the JCT SBC/AQ 2024, for example). Even in cases where there is no entitlement to money, an extension of time can offer protection from delay claims.
Similar provisions are also present in NEC4 in the form of ‘compensation events’.
Contractors should also review the fluctuations provision (clauses 4.13 and 4.23 in JCT CM/TC 2024, for example). If the fluctuation clause is not adopted, it means it is a fixed-priced contract, and the only avenue of relief is the variation clause and arguing it is a relevant event.
Other immediate steps for contractors include identifying whether delays fall under relevant events or relevant matters, issuing notices on time, and robust record-keeping with a view to evidence mitigation and early warnings.
For employers and consultants, now is the time to ensure the timely release of information, prompt responses to contractor notices, and avoiding actions that inadvertently create employer‑risk delays.
What about parties entering into new contracts?
For prospective contracts, the real-world volatility needs to be reflected in the contract in terms of fluctuation clauses based on work categories or resource-specific inflation indices.
Mechanisms allowing price adjustments when a particular item inflates beyond a set threshold can also be included. Well-drafted and clearer risk‑allocation provisions can be included in contracts so that a hike in material, labour, or fuel costs does not immediately push projects into dispute.
Early‑warning mechanisms and well‑defined compensation or delay‑related clauses also help prevent disagreements.
Should procurement and pricing strategies change?
Diversifying procurement routes is advisable. Also, stocking materials when the price is low could save money in the long run. However, it is of paramount importance to be mindful of storage and cashflow. Targeted stockpiling rather than indiscriminate hoarding is vital.
Contractors should be careful about pricing to ensure a sufficient cushion for market fluctuations.
How should programmes and specifications adapt?
It is crucial to have flexibility in programmes and contingencies for longer delivery times, as well as terms in the contract to reflect this risk.
All three – the employer, contractor and professional team – must work closely together to reassess specifications, redesign where possible, and identify cost‑efficient alternatives that preserve fitness for purpose.
Collaboration not confrontation
Both the employer and the contractor should know that they are working towards the same goal rather than being adversarial. Competence, communication, transparency and professionalism deliver projects. At the end of the day, the contract is simply a framework and does not always determine whether a project succeeds: it is the people who make the difference.
The CM March 2026 issue of Construction Management magazine is now available to read in digital format.
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