by Anand Udayakumar

Purpose

Global construction markets are once again feeling the strain as geopolitical shocks reverberate through supply chains, procurement pipelines, and construction sites. Contractors are reporting rising material costs, disrupted logistics, stalled fabrication, and tightening security controls. These pressures are not confined to projects within conflict zones but are increasingly impacting projects or contracts thousands of miles away through disrupted shipping corridors, sanctions, energy volatility, and heightened insurance premiums which are all threatening to derail planned delivery.

During periods of heightened geopolitical uncertainty, construction projects benefit from enhanced readiness and structured strategies to manage unpredictable risks. An operating mindset that integrates significant readiness, efficient resource prioritisation, and prompt decision-making becomes crucial.

The thinking behind this article draws from my previous experience in conflict-affected and high-risk environments:

Real Scenario 1 – Terrorism-related disruptions and hostilities on a cross-border hydroelectric megaproject in the Indian subcontinent presented difficulties for contractor’s performance, resulting in contractor’s termination and liquidation of securities.

Real Scenario 2 – One of world’s major immersed tunnel projects suffered critical disruption to custom vessel production due to a conflict situation in Europe leading to contested claims and dispute escalation.

A Potential Roadmap

By reflecting on what would likely have been effective in these real‑world scenarios, a ten‑stage framework is set out below. The application of these stages is intended to be project‑specific, including its nature, geographic context, stage of completion, technical complexity, stakeholder dynamics, and the unique pressures arising from operating in or around conflict‑affected environments.

Stage 1: Centralised Control & Enhanced Reactiveness

When conflict hits, governance becomes the initial line of defence. The core idea being appropriate/increased coordination between execution, planning, procurement, commercial and claims teams, including creation and management of a centralised/singular dashboard (covering for example, top packages, route and cost/time exposures) to facilitate real-time tracking and enhanced record keeping.

For heightened reactiveness, this governance structure is encouraged to be reinforced with proper chain of command to facilitate quick/reasoned decision making.

Stage 2: Actual Impact Identification

Failure to identify actual impact — as opposed to assumed or generic consequences — is one of the most frequent and damaging errors. The project can often usefully be segmented into discrete impact areas by geography, system, trade, or work package. Each impact could potentially be linked to a clearly defined causative event, bounded within a demonstrable time window and with risk allocation attributed to the correct party.

The objective would be to produce a targeted list of critical impact areas. While preliminary views on cost and time may emerge, priority to establishing systems that allow precise task level identification and alignment with the programme is likely to be helpful.

Stage 3: Operating within Contractual and Legal Confines

Prior to escalating an impact, consideration of mitigation strategies might cater to the project’s best interests. Focus on impacts that specifically trigger contractual entitlement should be rigorously tested against all available contractual routes for relief.

In conflict‑driven contexts, these commonly include force majeure or exceptional events, change in law (including sanctions), allocation of employer and contractor risks, suspension or termination thresholds, price adjustment mechanisms, prolongation and disruption compensation, and programme and extension of time provisions.

Critically, contractual analysis is suggested to be undertaken alongside applicable legal (i.e., statutory and regulatory requirements). Reliance on contract alone, particularly where new or amended laws apply, has the potential to expose parties to unexpected compliance and entitlement risks.

Stage 4: Quantifying the Cost Impact

After establishing entitlement, the next stage focuses on setting a clean/robust benchmark against which these impacts could be measured. From a cost quantification perspective, an objective approach that facilitates the identification of cost impacts tends to be most effective. This allows for clear categorisation of impacts, which may include direct disruption, time-related preliminaries, labour inefficiencies, logistics and freight escalation, material shortages, compliance costs, security measures, and financing impacts.

Understanding price posturing (fixed or subject to escalation), deploying relevant quantification methodologies, and placing reliance on credible sources of contract or external sources of cost data can serve to help.

Stage 5: Tracing the Path of Delay

Delay analysis in conflict-affected environments are particularly sensitive, given the prevalence of concurrent pressures. The starting point focusing on a robust and logic‑sound baseline programme that accurately reflects pre‑conflict conditions is likely to benefit.

Conflict related events could then be traced through the programme to identify their effect on critical and near critical activities. The analysis may benefit from carefully distinguishing delay caused by conflict situation or imposed restrictions from preexisting deficiencies, contractor risk events, or unrelated employer changes. It is generally advisable to rely only on delay that is both causative and critical for time entitlement.

Stage 6: Notice Strategy & Time-Bar Protection

Procedural compliance often plays a crucial role in consideration of claims. It is generally advised to comply with all applicable contractual notice obligations, including early warnings, force majeure notices, delay notifications, reservations of rights, and interim particulars, to be triggered promptly and consistently by reference in particular to the express contractual provisions.

By having regard to the requirements of applicable provisions, notices should seek to provide as much information as is reasonably possible under the circumstances explicitly to identify the conflict event relied upon, its operational consequences, and its anticipated time and cost impact, while retaining flexibility to update as conditions evolve. Adopting a disciplined notice strategy while protecting entitlement against time bars has the potential to evidence proactive contract management. Adherence to time-bar provisions may be prudent, even in jurisdictions where its compliance may not be thought to require rigorous enforcement.

Stage 7: Mitigation Measures & Re-Baseline Programme

Demonstrating reasonableness through active mitigation can be particularly important in conflict-affected projects. A structured mitigation register is advised for critical activities, capturing options such as alternative sourcing, specification changes, rerouted logistics, split shipments, resequencing, or demobilisation and remobilisation strategies.

Effort should be made to assess options against feasibility, safety, cost, and contractual constraints, with clear reasons for proposals made/decisions taken. In tandem, a revised and transparent rebaseline programme should be encouraged to reflect restricted access, extended lead times, and the redefined critical path imposed by conflict conditions.

Stage 8: Subcontractor & Supply Chain Management

Alignment between subcontractor and supplier positions with the main contract is often best supported through consistent flow‑down of notices, preservation of back‑to‑back rights, and early engagement on matters such as delay, price escalation, and performance risk. Careful consideration of risks assumed by the contractor, particularly where those risks fall outside the subcontractor’s scope or do not pass through contractually, is important.

Specific attention is generally recommended required in relation to labour availability, cross‑border movement, single‑source dependencies, and suppliers exposed to geopolitical risk. Early intervention in these areas can help reduce the likelihood of cascading disruption that may otherwise escalate and adversely affect the project as a whole.

Stage 9: The ‘Claim’ Stage

This stage focuses on converting entitlement into a substantiated and defensible claim relying on contemporaneous records—programme updates, correspondence, procurement data, cost records, and market indices to demonstrate clear cause‑and‑effect narrative linking conflict‑related events. Depending on the claim’s complexity and the importance it represents, working jointly with reputable external claim consultants having expertise in handling such situations is likely to strengthen outcomes.

Stage 10: Exploring Multiple Resolution Pathways

The ongoing exploration of available resolution pathways can assist in avoiding formal disputes and facilitating settlement, with escalation typically reserved as a measure of last resort. The suitability of any approach will generally depend on factors such as the strength of the evidential record, prevailing financial pressures, the status of any continuing commercial relationships, and the parties’ respective dispute appetites.

Early involvement of appropriate legal counsel is often a critical consideration in navigating these issues effectively. In addition, the engagement of neutral, independent experts can be valuable in clarifying areas of dispute and supporting the identification of potential settlement positions. Prior to embarking on full arbitration or litigation proceedings, third‑party expert analysis is frequently beneficial in informing strategy and resolution prospects.

Conclusion

Conflict-affected situations can extend far beyond disruption to construction progress and materially alter the wider operational landscape. Conventional approaches, such as standard project controls, reactive claims strategies, and fragmented governance arrangements, are often ill- suited to environments characterised by conflict, sanctions, geopolitical instability, volatile pricing, and energy constraints. In such circumstances, a deliberate shift towards a readiness-driven mindset is likely to be more effective. Adopting this approach could have better preserved contractor’s position and mitigated tensions between the parties in the two real scenarios initially outlined.

The staged framework suggested in this article is designed to encourage contractors to transition from reactive firefighting to structured readiness when conflict strikes. Preparedness under conflict conditions is not about anticipating every scenario, but about building systems capable of protecting the contractor’s and the project’s interests as situations evolve.

In uncertain and volatile environments, contractor’s readiness should not be exceptional, it should be natural.

About the author

Anand Udayakumar is a Senior Consultant at HKA, based in London and formerly Dubai (2021–22). A qualified lawyer, he brings 10+ years of experience across 100+ projects in construction, infrastructure and energy, advising on legal, contractual, quantum and delay issues throughout Asia, Africa, Europe, and the Middle East.

Combining private practice, in-house and consulting experience, Anand excels at synthesising complex facts, navigating multi stakeholder environments, and delivering strategic, pragmatic advice on megaprojects and high value disputes. 

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