How To

Post-Brexit Transition Advice For Project Managers

no deal brexit

While the UK and EU continue to negotiate a new trading and security relationship, we draw ever closer to the end of the transition period and regardless of the result, ‘deal’ or ‘no-deal’, there will be changes that will affect firms from 1 January 2021.

Either way, businesses need clarity on what they will face on 1 January in order to implement their plans. In the event of a deal being agreed, project managers need to have arrangements in place to analyse rapidly the practical implications for them of what will be a large and complex legal text.

In the event of there being no deal, the requirements for your business should already be clear and measures should be in place now to manage the added complications on trade and regulation, increased costs through tariffs and duties and updating commercial arrangements and contracts to reflect this new reality.

Firms affected by the end of the transition period will have structural, operational and contractual impacts to their underlying business and by its nature, projects that rely on an element of cross-border trade or service delivery at any point in the supply chain.

Few projects will be able to continue ignorant of the changes that post-Brexit transition brings. Whichever side of the transactional divide the business or project sits, there is likely to be an element affecting the running of the project.

It is for businesses to assess what those precise risks are, not just for you and your business and project to consider, but also from external factors and even internal cogs in the wheel. For example, it is important to consider what plans your suppliers and subcontractors have in place. Do they have any in place? If not, why not?

We anticipate that the effects of the end of the transition period are likely to be dynamic and thought should be given to post ‘day-zero’ impacts and longer term planning may require attention to existing and new contracts now.

Businesses may need to change and adapt them to ensure project timings and budgets are met, and this could be a large undertaking in and of itself.

Supply chain impacts due to tariff and non-tariff barriers may result in delayed border crossings of finished goods and component parts, which will have contingent impacts upon delivery milestones and the expense of moving goods and parts into and out of the UK.

There may well be substantial but reduced impacts on other shipping ports in mainland Europe.

Increased or dramatic currency fluctuation is a potential outcome of a ‘no-deal’ scenario and this should be analysed on a case-by-case basis.

A reduction in the value of sterling, for example, may well be a positive if prices for exported products or services have already been set, but will have a converse effect when the impact of more expensive component parts or resources are factored in.

If not already factored into planning, immigration and the right to work is an important issue to consider. Coupled with the deferral to spring ’21 of IR-35 implementation, this will have a real-impact upon the availability of project and technical team resources.

Project Managers will have to individually assess the effects of ‘no-deal’ on a project by project basis.

They will need to assess the impact (initially and ongoing) and any measure or steps that need to be taken with such arrangements to either mitigate or take advantage of the potential issues that may arise (eg. diversification of sourcing, re-shoring of supply chains and/or personnel, currency fluctuations).

To do this, risks should be signposted and ‘traffic-lighted’ – red = critical, green = not important, amber = somewhere in-between.

From a project specific prism, this is now a contract remediation and risk management exercise though it is sensible to put this into some context.

While the end of the transition period is a massive, countrywide upheaval, external variables such as this are not entirely novel. Businesses went through a similar process when the GDPR became operational in 2018 and the UK is currently undergoing a significant change on everyday life due to the coronavirus pandemic.

Nevertheless, this exercise is about preparation and balancing the risk of doing nothing, versus exhausting the budget on preparation that is unnecessary, or becomes obsolete.

At this late stage, it is vital to be confident that your plans are watertight, to minimise the risk of nasty surprises on 1 January 2021. Our teams are currently working with many clients, helping them to ensure that they have a full and accurate understanding of what will change and that they have taken all necessary steps to prepare.

James Corlett is a partner in Fieldfisher’s Commercial team, Richard Tauwhare is an advisor in Fieldfisher’s International Trade team.

James Corlett and Richard Tauwhare
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