Force majeure and your projects

It’s the second time in my career that I’ve ever seen ‘force majeure’ being actively discussed in project management discussions and forums and I wanted to spend some time during this blog post to discuss and explain what it is and why it is important for us as Project Managers.

What is force majeure?

Force Majeure is considered to be: “an unforeseeable circumstances that prevent someone from fulfilling a contract”. What this means in simple terms is that: Both parties are free from liability or obligation to deliver goods when an extraordinary event (e.g. COVID19) occurs. In this case, due to the inability of both suppliers and vendors to provide and deliver services needed for projects, it can cause issues with projects being stopped prematurely. The last time that this was used extensively was during the Second World War. Some legal firms have put out some interesting notes on the topic which is worth reading.

What is the impact of this on your project?

There are a few impacts that this can bring to your projects. Whilst researching this blog post, I found the following out:

  • New projects were being stopped due to current uncertainty for knowing when supply chains will be reopening
  • Suppliers are now adding COVID19/any pandemic of any description to contract discussions and forcing monetary penalities to be waived if this appears
  • Increasing risk to project delivery
  • Some projects were being stopped entirely due to the ability of both supplier and customer to deliver the project in its entirity.

What do you need to be aware of?

There are a few things that you need to be aware of as a Project Manager when it comes to force majeure.

  1. What is written in your SOW/contract regarding the clause and any indemnities that you may need to align to (this is also from a legal perspective). This can include items such as performance, delays and hinderence for both parties.
  2. Understand the immediate impact of a pandemic on your projects and team. You will need to initiate your crisis management planning.
  3. For any new projects/upcoming projects, what this can mean when you are discussing with your clients and suppliers.

Conclusion:

COVID19 does not give permission to completely cancel engagements or whatever behaviour to mitigate the impact on the company or project. Project Managers should be governed and led by the contract and or local law for what is allowed / accepted. Therefore, I recommend that if you have not already looked through your contract with your legal team, to do this as a matter of priority and plan your mitigation plan for moving forward.

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