COVID-19 and The Impact on Construction Industry
While the world economy has been hit hard by the outbreak of the COVID-19, the construction industry is also facing dramatic and disruptive challenges; such as financial pressure, labor shortages and supply chain issues.
Here is some practical advice for keeping on budget and on time during these unprecedented times:
1.- Safety. Safety is the overriding imperative on all construction projects. Employers should designate and empower a COVID-19 Compliance Coordinator and post the CDC guidelines onsite. The six-foot social distancing requirement, portable handwashing, wearing gloves, prohibiting carpooling to the jobsite, and closing jobsites to the public are now considered best practices and mandatory expectations for all employers.
2.- Notice. Give notice early and often! After providing notice, follow up with timely reports, cost information and detailed schedule impact data. Maintain detailed records if you want to preserve any chance of recovering for delay impacts. It is not enough to generally argue that your work has been delayed by COVID-19. Be specific.
3.-Collaboration. This is no time for battles or disputes between general contractors and subcontractors. General contractors should ascertain the cash flow status of their subcontractors to determine whether they will be able to perform under the current revenue-starved environment. A key element for project success is that all parties need to work together to identify risks, loss of productivity, schedule impacts, supply chain issues, safety issues, etc.
4.- Project Financing. “Cash is king,” and if the availability of private and public funding is impaired, work may cease and sureties may be required to take over on payment and performance bonded projects. Conduct adequate due diligence before committing to business relationships. On an ongoing basis, be sure to request and receive adequate assurances of financial ability to pay whenever possible.
This is intended as general advice and should not be interpreted as legal advice. Each situation is unique and requires specific analysis of relevant contracts, facts and legal obligations.
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