The construction industry is currently facing a lot of changes that restrict the ways business is done efficiently. In many areas with shelter in place orders, construction is still considered an essential business, often with the caveat that they maintain social distancing guidelines and/or have a maximum staffing size. However, other areas are more restrictive on the type of construction allowed ex: critical infrastructure only, affordable housing, etc.). Click here for a list of regulatory actions in place by region.
If your construction site was shut down due to a shelter in place or by the owner, consider a Construction Status Review in order to minimize impacts to the property. If you are a developer, this interview with Lisa Glahn of Foley and Lardner offers tips on how to responsibly mothball your site.
For construction projects that are moving forward, the following items may want to be considered as the project proceeds.
1) Communication. In times like these, where the situation is changing almost daily without an end date secured in sight, it is important that all parties (ie: lenders, consultants, owners, GCs) communicate more often than normal by both phone and email. In fact, video conferencing is another great way to communicate with your team, as it is the next best alternative to being in-person. It also allows you to read their body language, which may help alleviate any distrust that may be building.
2) Inspections. Even if you don’t have a full crew at work at your construction site, inspections such as construction progress monitoring are an important part of a construction project in order to see what work has been completed. However, consider opting for virtual walk-through inspections, as needed, for both safety and regulatory reasons. In addition, finding creative ways to conduct a thorough virtual inspection allows you to keep projects on track with less delays.
3) Materials. Most countries, including the US, are experiencing materials impacts due to COVID-19. Understanding who and what is being impacted is important. Will the project’s materials be arriving on time? Are there shipping issues? Is there a domestic trucking strike that can affect delivery? Has the merchant closed until further notice? Should you be looking into alternative vendors?
4) Schedule. Is the schedule still possible given the current climate? Is there enough labor or is enough labor allowed on-site to keep the project moving steadily? Are there out-of-state subs affected by a shelter-in-place order that does not allow them to get back on the job site? Is there a need to build in buffer time for materials to create an adjusted schedule? Have necessary inspections and inspecting entities been affected/delayed? Have the sources and streams of funding been impacted? Is it time to establish a realistic, revised completion milestone(s)? Your funds control consultant may be helpful in flagging items/materials that may also be of concern to the project due to production or shipment delays.
5) Costs. Costs go hand-in-hand with labor, materials and the project schedule, as any problems identified with those can impact the cost significantly. With delays, general conditions may continue impacting the budget. Insistence of a strict completion schedule could cause contention and may result in claims for additional overtime or premium pay. Carefully review the project to identify items that may impact the budget, whether it is due to a regulatory decrease in workforce, labor shortages, material shortages, or schedule considerations. A 3rd party consultant can help you with a budget re-review.
6) Legal. Review your contracts and other legal documents to see where areas of risk and concern may be (ie: lender’s loan agreement, Owner/Contractor agreement, etc.). Proactively review what could be the repercussions if the project gets shutdown. Does COVID-19 constitute a force majeure event under your contract, and what are its provisions? Be sure to talk to in-house counsel and communicate concerns with the appropriate parties, as needed.
7) Protocols. Despite so many procedures already in place for a typical commercial construction project, it is important to institute a protocol to address COVID-19 concerns for the safety of all involved. It would be prudent to have GCs disseminate any updated safety protocols, which may be voluntary or may now be required. Updated safety protocols may include specific COVID-19 measures including, but not limited to, daily contractor check-ins, the taking of temperatures prior to allowing workforce on site, required rotating breaks, required staggering start times for different trades, daily sanitation/cleaning, requiring masks to be worn at all times, social distancing, etc. Although creating and instituting new protocols takes time, it is a worthwhile effort and can help give all the parties involved peace of mind.
Although things are uncertain now, remember it is temporary and adapting quickly is the best way to assure your projects can successfully move forward.