A Contractor Plan: Construction During COVID-19

April 29, 2020

Construction is complex. The Coronavirus Disease 2019 (COVID-19) further complicates an already challenging time within the construction industry. The immediate ripple effect of COVID-19 to General Contractors and their Subcontractors, Suppliers and Vendors have yet to be determined. Further complicating the matter is the continuously changing applications and classifications of the industries and project types between governing authorities at the outbreak.

Contractors that are allowed to continue work on ‘essential’ projects during the pandemic need to consider the care and protection of their workforce and the surrounding communities. Contractors need to understand what is required to protect their workforce, account for supply chain impacts and manage labor availability uncertainty, and how these conditions may impact the cost and time to perform work on their projects. Given that 40% to 60% of small businesses (1) never reopen their doors following a disaster, Contractors must remain diligent on the financial viability of their Suppliers and Vendors.

Also, Contractors need to evaluate how their local governments classify their projects. Most governmental agencies have deemed construction, or at least various types of construction activity, as ‘essential’. On March 16th, the President issued the updated Coronavirus Guidance for America that states:

“If you work in a critical infrastructure industry, as defined by the Department of Homeland Security, such as healthcare services and pharmaceutical and food supply, you have a special responsibility to maintain your normal work schedule.”

Although not specifically identified as critical, the guideline is not a federal directive and allows state and local policies to provide more guidance. Most state and local agencies appear to deem construction, or at least various types of construction, as essential.

Despite the ability to continue, over half of those surveyed by the Associated General Contractors of America (AGC) have had projects halted due to COVID-19 as of April 24th. The impact to Contractors continues to worsen each week with nearly 50% of firms having to furlough or layoff employees in March and April. Furthermore, over 40% of respondents had an Owner/Developer or Governmental Agency direct them to halt work on projects currently in progress in March or April, and 16% of them had projects canceled that were supposed to start in May, June or later.

If a Contractor is fortunate to continue to work on a project, what steps can one take to plan the remainder of its projects under COVID-19 conditions? In this article, we explore the challenges and immediate actions that can be taken and provide a checklist that General Contractors and Subcontractors can use to plan their projects under COVID-19 conditions.

Challenges for Contractors

COVID-19 will pose challenges for Contractors that need to be measured, evaluated and mitigated. These challenges could include but are not limited to:

Immediate Actions for Contractors in Response to COVID-19

We recommend immediately performing the following three (3) actions:

Contractors’ Response Checklist

There are several steps Contractors can take now to mitigate the effects of the pandemic on the cost and time to complete their construction projects.

How Spire Can Help

Here are just a few ways Spire is helping Contractors respond to COVID-19:

The information provided above is general in nature, has been prepared for informational purposes only and does not constitute legal advice. All parties need to evaluate their specific project conditions, contract, local codes and ordinances and contact their attorney or consultant to understand and apply these and other general principles for their project. The information is intended but not guaranteed to be correct, complete, and up-to-date. No representations or warranties are made, express or implied, that this information is correct, complete, or up-to-date.

Copyright © 2020 by Spire Consulting Group, LLC. Worldwide rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without the prior written permission of Spire Consulting Group, LLC.

(1) According to the Federal Emergency Management Agency (FEMA)
(2) A basis is a written documentation that describes how an estimate, schedule, or other plan component was developed and defines the information used in support of development. A basis document commonly includes, but is not limited to, a description of the scope included, methodologies used, references and defining deliverables used, assumptions and exclusions made, clarifications, adjustments, and some indication of the level of uncertainty. (AACE International Recommended Practice No. 10S-90)

The content included in this article is for informational purposes only and does not reflect the opinions or recommendations expressed by any individual unless otherwise stated.

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