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In some respects, a construction project is a lot like a train—once it comes to a stop, it takes considerable time and energy to get it restarted.

That’s where many contractors find themselves in the world of COVID-19. While not all projects have come to a screeching halt during the coronavirus pandemic, most of them slowed significantly amid worldwide stay-at-home orders, travel limitations and other restrictions.  

t’s estimated that there are some 7,500 U.S. projects currently delayed, much of them in the public sector, says Troy Dohmeyer, technical services manager for construction at The Cincinnati Insurance Company. “Fewer people on the road translates into lower gas and sales tax revenue and that ripple effect has delayed many public projects because the revenue just isn’t there” according to Dohmeyer.

It’s hard to find a comparable precedent. While natural disasters, such as hurricanes, are undeniably impactful, they’re also somewhat predictable with regard to duration and potential impact zone. “The pandemic literally brought everything to a stop,” Dohmeyer says. “For most construction projects, it created a seismic ripple effect that impacted the entire supply chain; the factories that contractors get their steel or their glass from stopped production, too.”  

A lot of contractors have pivoted, but supply chain issues are an ongoing problem. That’s because roughly 25% to 30% of construction and manufacturing materials come from China. 

A Holistic Approach

Contractors taking a comprehensive approach to restarting projects will be the most successful at avoiding negative impacts down the road. In the process, they should holistically evaluate projects in order to determine current and future impacts of the pandemic, whether they be to the supply chain, labor availability, productivity, safety protocols, etc.

Every contractor facing a restart should ask a series of specific questions that take a long-range view, for example:

  • “How do I communicate with the subcontractors?” 
  • “How do I document re-start costs?” 
  • “Has the project timeline been impacted?” 
  • “What does an average crew size look like”?
  • “Can I scale up manpower when necessary?” 
  • “How do I interact with the owner?"

Finding workers may be an issue, as many workers left the industry during the pandemic in pursuit of readily available unemployment benefits and rebuilding the labor pool will be a slow, arduous process as a result. “The labor market was already a tight rubber band in January and February, and the labor pool was stretched beyond capacity. When every project either slowed down or stopped, there was no ability to keep that workforce,” Dohmeyer says. 

Contractors should also plan for state- or locally imposed health and safety guidelines. That can be a complicated process for those working in multiple states with regional differences. “It’s going to raise a lot of different specters that we’re not accustomed to in the construction industry,” Dohmeyer says. “It might ultimately play a role in how a contractor hires people for projects, the contracts they sign and the types of products they buy.” It could even slow the permitting process by weeks or months, as many government employees continue to work from home.

Proactive Documentation and Planning

Regarding contracts, companies should always review the ever-changing landscape of their work and should ascertain whether a particular contract adequately addresses individual concerns. In the world of COVID-19, contractual language and insurance policies should be evaluated to address claims, risk and liability.

Safety is an equally important issue. “It’s incumbent upon the subcontractor, general contractor and owner to ensure the safety of a project,” Dohmeyer says. “PPE availability, employee distancing, hand wash stations, lunch time protocols, etc.—all of those need to be addressed.”

Most importantly, perhaps, contractors should document any lessons learned on projects to improve future work processes. “We tend to have a short memory; we forget about the lasting impact,” Dohmeyer says. “People need to look at the impacts of past events and determine what was changed.”

The bottom line: denial is not an option. “The contractors that pivot the quickest are the ones that will succeed,” Dohmeyer says. While the short- and long-term effects of this pandemic are yet unknown, a sound restart strategy could be the key to a contractor’s success. “If you embrace change, figure it out and move forward, you’ll be ahead of the game,” he says. 

For More Information, Visit CinFin.com


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