By Jaclyn Sharma on Apr 22, 2020 1:27:35 PM
The Associated Builders and Contractors (ABC) of Wisconsin Chapter recently published an article, How contractors can recover damages due to COVID-19, which highlights what contractors need to track to be eligible to recover, how to prove contractor impacts, and future contracts.
As it becomes more apparent that this coronavirus is not going away, the construction industry (and others) needs to continue exploring opportunities to improve processes and implement tools which can help protect against the ongoing fallout.
Potential Contractor Impacts Caused by COVID-19
Per ABC’s article, some of the key impacts caused by COVID-19 include:
- Late delivery of materials required to complete the work
- Partial delivery of materials required to complete the work
- Cancelled delivery of materials required to complete the work
COVID-19 has disrupted the supply chain and as a result, there are challenges with material deliverability. So, we ask, how are you mitigating these risks? Do you have a system in place for tracking your material deliveries? Are your project teams assigning material requirements as part of your planning process, so they do not become constraints for the crews executing the work? If you do not have a system in place for managing material delivery requirements, how will you provide documentation for recovery? There are tools that can help to manage this process, and now may be a good time to explore options to improve this communication and documentation.
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Lack of Workforce to Proceed Efficiently
Prior to COVID-19, the construction industry was already facing a labor shortage. Now, this issue is becoming even worse than it was before. COVID-19 is causing an increased resource shortage as workers become ill or unavailable and are unable to return to work for weeks. How are you handling work with limited resources? Do you have a thorough, well-defined list of COVID-19 hazards and controls to mitigate contamination within your workforce? How about a tool that (remotely) communicates this information with your crews? Are you developing well-thought weekly and daily plans to ensure your resources are being allocated efficiently? Do your project teams understand how crew sizing and mix can impact productivity? These are all important questions for you and your project workforce to consider, ensuring your crews can work as efficiently as possible, with limited resources.
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Labor Productivity Impacts
Like the ongoing workforce shortage, the construction industry has seen challenges with labor productivity for about 60 years, with productivity flatlining and declining over time. Now, there are additional challenges to maintaining and improving productivity due to:
- Social distancing
- Unavailability of complete crews and workforce caused by:
- Owner restrictions
- Government restrictions
Productivity directly impacts your bottom line and your competitive advantage. How did you feel about your productivity prior to COVID-19? Did you have a means of tracking this information? Do you know, at this moment, what your overall productivity looks like? Do your crew leaders know where they stand? Do you have the means to capture COVID-19 productivity impacts for future bidding historical data purposes? How are you sharing this information between the field and the office while respecting social distancing guidelines? What are you doing now to improve performance across your organization? If you don’t have answers to these questions, you might consider exploring opportunities for frontline supervisor training and/or a solution that can seamlessly provide you with this information.
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Demobilization and Remobilization to Project Sites
Due to COVID-19, you may have found yourself in a position where you are required to demobilize or remobilize at project sites unexpectedly. Unfortunately, with this comes unanticipated time and labor cost. Have you rescheduled these tasks? Do you have a plan to complete these tasks as efficiently as possible to minimize the burden? How are you planning to track the additional time and labor costs associated with this work? It is critical to monitor additional costs associated with this scope that may be incurred, and to ensure your crews are performing as efficiently as possible to keep these to a minimum. Be sure to have a good system in place to do so.
Project Delay Costs
Yes, there are labor costs associated with demobilizing and remobilizing at project sites, however, these costs account for a small component of the overall potential financial impact to projects caused by COVID-19. If your project has been impacted by COVID-19, it is likely that the schedule is off and there could be significant delay impacts. Here are some key points to consider:
- Do you have projects that are impacted (in some capacity) due to COVID-19?
- Do you know, daily, if you project is on schedule to complete on time?
- Are you tracking variance in planned start and end dates vs. actual start and end dates for your project milestones?
- Do you have a system in place that provides leading indication into your schedule reliability?
- How are you documenting the causes of your milestone and project delays?
As suggested in the article published by the Associated Builders and Contractors, impacts should be evaluated on a project by project basis, and you should start collecting data now to prove the impact and damages that you are currently incurring. Look for opportunities to improve your data collection, ensuring you are adhering to social distancing guidelines and mitigating the potential for contamination amongst your teams. Seek solutions that are cloud-hosted (can be accessed anywhere), provide transparency to seamlessly share this information between field, project, and management teams, and update in real time to ensure you are equipped with the latest and greatest information. Having a centralized tool that can capture this information will help document the impacts as you seek opportunities to recover these unanticipated damages. Of course you'll want to mitigate COVID-19 impacts to the greatest extent possible, but when incurring compensable damages comprehensive documentation is essential. REMEMBER, IF IT'S NOT DOCUMENTED, IT DIDN’T HAPPEN.