As you are aware, an outbreak of a respiratory disease caused by a novel (new) coronavirus that was first detected in Wuhan City, Hubei Province, China has now been identified in many locations internationally, and in the United States. The virus has been named “SARS-CoV-2” and the disease it causes has been named “coronavirus disease 2019” (COVID-19).
Rider Levett Bucknall is dedicated to ensuring that employees are safe and, to the greatest extent possible, able to manage projects without disruption in service. We have done this internally by implementing a phased plan to address the implications of COVID-19 as it spreads at an increasing rate.
We are also committed to guiding our clients on potential risks to their construction projects that may come as a result of COVID-19.
By now, owners and contractors should be aware of contractual provisions that may come into play. They should have a plan to handle issues concerning late delivery, or unavailability, of materials, as well as potential suspension, termination, cancellation of the contract, or a force majeure event. They should also have a clear understanding on where legal responsibility resides for cost overruns, have clarification on excusable delays, and fully understand coverage of insurance policies.
At this time, contractors and other relevant firms should also have project specific COVID-19 mitigation plans and project/site-specific disaster plans in place.
As this pandemic continues, some workers may not report to job sites for a variety of reasons including their illness, illness of family members, or even fear of taking public transport. In the short term, if this happens, it may be difficult to get people to return to construction sites, so contractors may have to pay a premium to induce workers to return. There is also the risk that governments, under pressure to take more stringent measures, could shut down major construction projects, or transportation infrastructure, in parts of the U.S. and Canada.
Given the impact that COVID-19 is having on financial markets, and the economy as a whole, there is a chance that this pandemic will also drive a recession, which will eventually drive construction costs down as contractors, subcontractors, and suppliers scramble to win the reduced number of projects in the market.
As a reminder, it may not be too late to continue with these preemptive measures to support a safe and functioning project:
- Consider forward ordering, and early delivery of, material to avoid delays (however, additional storage areas for deliveries and double handling of materials for early storage may have cost implications);
- Encourage contractors, owners, and other relevant firms to develop project specific COVID-19 mitigation plans;
- Encourage contractors, owners, and other relevant firms to develop a project/site-specific disaster plans;
- Limit face-to-face meetings and non-critical business travel where possible; and
- Endeavor to implement CDC recommendations within workplaces and project sites. https://www.cdc.gov/coronavirus/2019-ncov/index.html
At Rider Levett Bucknall we are deeply vested in our clients and projects. We will continue to monitor the impact of COVID-19 on the construction industry so we can provide relevant information on what this means for your projects.