Force Majeure: When The Unforeseen Happens On The Project!

As the world gets smaller with our global interactions and networking, our projects are more and more impacted by natural disasters, civil unrest and even terrorist acts throughout the world.  Projects could be placed at a standstill, or even cancelled or ruined.  As project managers, it’s our job to plan for and manage these occurrences.  They unfortunately aren’t as unforeseen as they used to be in past years or decades.

Most contracts include specific clauses called Force Majeure (a French expression which can be translated into “Superior Force”). These are contractual clauses designed to minimize the liability and risk to the contractors in such situations as natural catastrophes or unavoidable circumstances, which interfere with the planned course of events that make it difficult for stakeholders to fulfill their obligations.

An example of a recent tragic event that would be considered a Force Majeure is the  terrorist hostage situation at an international gas plant in Algeria in January 2013, where unfortunately over 30 workers were killed. You can be sure that the project managers and legal teams in the companies involved seeped through their Force Majeure clauses.

There are also many other situations where damage is done to property, quite unforeseen and unfortunate, but the situation cannot be considered as a Force Majeure. One such situation is when the transportation company that you hired has an accident, due to driver’s DUI, while shipping your products from one location to another.

If you encounter a Force Majeure event, here are 7 key tips on how to deal with it and effectively manage your project for the future:

  • READ: Read and understand your contract clauses on Force Majeure. It is important to understand how it is defined and treated in your contract. Consult and involve your legal team as early as possible.
  • NOTIFY: Send an official notification to your client ASAP.  Reassure your client about your full ongoing investigation of the event and your risk-mitigation efforts to minimize impacts on their project. It is a good idea to notify your insurance company as well.
  • GATHER: Gather as much information and documentation about what happened as possible. Get news reports, police reports, photos and videos, as much info as you can get your hands on.  Keep this information on file for future reference.
  • RE-PLAN: Come up with a new plan to minimize any impacts on the project in the future.  Be sure to include risk mitigation strategies, and a new schedule.
  • RE-NOTIFY: Notify your client about your actions, and ask for an extension of time if you need one, referring to your contract (when applicable).
  • REPORT: Keep your client (and your insurance company) in the loop during the entire repair process.  Be sure to send them regular progress reports on any changes you have made. Documentation is key in being able to get an extension of time from your client.
  • AGREE: Meet with your client to discuss the new plan, agree on the corrective actions, and any time extensions.  Do not leave this agreement up in the air. Avoid ambiguity.