By Eleanor O'Connor – On
Although remote work in the construction sector does not allow on-site projects to progress due to the physical nature of the job, support staff such as architects, engineers, and administrative roles can take advantage of virtual conferencing as opposed to in-person meetings.
Note: We will be updating this article regularly.
Table of Contents
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Impact of the Coronavirus So Far
Much of America’s workforce is working remotely in response to the novel coronavirus (COVID-19) outbreak. Surprisingly, some construction projects have actually experienced rapid completion due to limited on-the-job disruptions and “blank” canvases (empty buildings).
Amid limited on-the-job disruptions though, the construction industry will likely be facing supply chain interruptions as a result of China’s slowdown as a result of the pandemic. Ultimately, there will soon have to be a tradeoff between limited on-the-job disruptions and supply chain slowdowns.
With supply chain interruptions, Trent Cotney of Cotney Construction Law warns of higher cost and price fluctuations, material shortages, logistics breakdowns, order cancellations, and extended shipping delays. These disruptions will also make securing funding and insurance increasingly difficult for builders.
As a result, facing slower project completions will expose construction companies to several legal vulnerabilities with suppliers and project owners. Also, keep in mind that some project owners may want to pause before moving forward with any work due to uncertainties surrounding the coronavirus outbreak and economy.
It’s also important to note that much of the COVID-19 impacts will not be felt by the construction sector until next year, especially for the non-residential construction sector. Anirban Basu, a chief economist for the Associated Builders and Contractors, states that this is because “non-residential construction typically lags the overall economy by 12 to 18 months.”
How Does COVID-19 Put Construction Workers at Risk?
Aside from health-related concerns, the following factors pose potential risks to construction professionals:
➤ Limited remote work abilities
➤ Insufficient contracts for construction projects
➤ Workforce shortages
➤ Supply shortages
Although on-site construction workers are unable to do their job while working from home (for obvious reasons), some managerial and support staff do have the ability to work remotely in the construction sector. For these roles, telecommuting and work from home procedures are still required to whatever extent possible.
Managerial and support staff are essential for the completion of on-site jobs, which is why construction firms need to have the proper tools in place to facilitate remote work within these roles. At the bare minimum, contractors should at least be conducting meetings with internal and external project partners virtually. Limiting any unnecessary in-person contact will ensure that projects run as smoothly as possible.
VoIP Teleconferencing & Cloud-Based Tools as a Solution
These internet and cloud-based tools can allow for a portion of your managerial and support staff to work remotely:
➤ VoIP multi-line phone systems with mobile capabilities (Arbeit Voice)
➤ Supplemental internet-based messaging tools (Slack)
➤ Cloud-based file storage (Dropbox)
➤ Screen-sharing applications (TeamViewer)
Whether you choose to use one or all of these tools, your off-site workforce will be better prepared to work from home (or anywhere with an internet connection). According to Andrew Hewitt, analyst at Forrester, for optimal productivity you’ll also want to utilize a VPN and ensure that your staff has sufficient bandwidth in the location they’ll be working from.
Andrew states that a VPN will provide authentication layers so employees can access the cloud-based systems mentioned above without compromising any sensitive data. As for bandwidth, an internet connection of at least 50 Mbps should be sufficient.
Legal liabilities and insufficient contracts for construction projects pose another financial risk to those working in the construction sector. If you haven’t done so already, now is the time to review your construction project contracts to ensure they have provisions to protect your firm from being liable for any of the following:
➤ Increased costs
➤ Supply chain delays
➤ Project interruptions
According to Trent Cotney, CEO of Cotney Construction Law, including or reviewing current force majeure clauses and price acceleration provisions in your construction project contracts are important for protecting your firm from being held liable for these scenarios.
Force Majeure Clauses
Including a force majeure clause can protect your firm by extending, temporarily suspending, or terminating the client contract due to unexpected and unavoidable events. Trent explains that when implementing this, make sure the force majeure clause answers the following questions:
➤ What events are considered force majeure?
➤ Who is responsible for suspending performance?
➤ Who is allowed to invoke the clause?
➤ Which contractual obligations are covered by the clause?
➤ How should the parties determine whether the event creates an inability to perform?
➤ What happens if the force majeure event continues for more than a specified period?
If you have already included a force majeure clause in your client contract that answers all of these questions, make sure that the provisions protect you against pandemics. Many contractors may not have considered that to be a potential risk when they originally included the clause.
Price Acceleration Provisions
Trent also explains how adding price acceleration provisions to your client contracts can protect your construction firm from labor and material price increases. These provisions give contractors the ability to adjust contract prices to more accurately reflect the revised actual cost of labor and materials. This can ensure that your firm receives the correct compensation when taking into account price surges that may occur as a result of supply shortages.
Here’s one example that Trent provides of a price acceleration provision that you could include:
“If there is an increase in the actual cost of the labor or materials charged to the Contractor in excess of 5% subsequent to making this Agreement, the price set forth in this Agreement shall be increased without the need for a written change order or amendment to the contract to reflect the price increase and additional direct cost to the Contractor. Contractor will submit written documentation of the increased charges to the Prime Contractor/Owner upon request. As an additional remedy, if the actual cost of any line item increases more than 10% subsequent to the making of this Agreement, Contractor, at its sole discretion, may terminate the contract for convenience.”
Specialized Subcontractor Shortages
In addition to potential supply shortages, the lack of specialized subcontractors needed to complete projects also poses a risk to construction firms.
“Factory workers, construction workers, supervisors, and managers could all end up quarantined in a city like Seattle and not be available to work,” Construction Attorney Steve Lesser says. "Absent a reliable work force, projects become stalled."
If your firm is located in or relies on subcontractors located in an area with a significant amount of COVID-19 cases, seek out back-up subcontractors in areas that have been less impacted by the outbreak that you can rely on if need be.
Supply Chain Shortages & Interruptions
Due to the slowdown in production that has been felt globally, supply chain shortages and interruptions are to be expected. With that comes more volatile fluctuations, increased costs and slower project completion times. You can protect your construction firm from legal liabilities with suppliers and clients by doing the following:
➤ Identify supply chain vulnerabilities and take action to mitigate these
➤ Implement cost-saving measures
➤ Review client contracts to ensure proper protections are in place
According to the New York Times, limited access to overseas supplies such as marble, tile, paving stones, furniture, lighting, and elevators pose one of the biggest threats to construction firms as of now.
Layoffs in Response to Higher Costs
With supply chain interruptions come higher costs, and with higher costs come potential layoffs. You may not have experienced rising costs of doing business yet, but you may soon. To prepare, take cautionary measures by finding ways to reduce costs and eliminating non-essential services. Layoffs should be the last option if all else fails.
If you’re looking to save money while allowing managerial and support staff to work remotely, consider transitioning to our VoIP phone system, Arbeit Voice. We’ve been able to unify companies’ communications while slashing phone bills by up to 50%. The best part is our responsive support team makes the transition and setup process as easy as possible for you and your employees.
How is the Outbreak Affecting Construction Projects?
The novel coronavirus outbreak (COVID-19) has been impacting construction projects differently in each state. Projects are continuing as normal in some states, while in others construction has come to a nearly complete halt.
The effect of COVID-19 on construction projects in specific states are arranged in alphabetical order below. We’ll be regularly updating this post to reflect updated state regulations, legislation and proposals affecting the construction sector, so be sure to check back often!
According to a ConstructionDive article, the governor of California has explicitly stated that construction work, including residential construction, is an essential service.
“The California State Public Health Officer and Director of the California Department of Public Health is ordering all individuals living in the State of California to stay home or at their place of residence, except as needed to maintain continuity of operation of the federal critical infrastructure sectors, critical government services, schools, childcare and construction, including housing construction.”
Due to the containment measures that have gone into place in the San Francisco Bay Area in particular, The Associated General Contractors of California are seeking clarification on whether the governor’s orders override the stricter construction shutdowns in certain cities.
Ramping Up Hospital & Building Construction
Not only is California allowing most construction projects to continue, but the head of California’s Building and Construction Trades Union has plans for thousands of construction workers to “retool and refit” hospitals and buildings as a “surge response to the pandemic.”
According to The Colorado Independent, a stay-at-home order has been issued for the following cities in the state of Colorado:
➤ San Miguel County
The order requires that businesses “implement work from home policies and delivery of goods to the greatest extent possible.”
Denver has considered liquor stores, recreational marijuana dispensaries, and all construction projects exempt from the order, given that “extreme physical distancing” is being put into practice.
Additionally, the governor of Colorado ordered all “non-critical workplaces” in the state to cut their in-person workforces in half. Construction along with the following industries are considered exempt from the order - health care operations, critical infrastructure, and manufacturing, critical retail, critical services, news media, financial institutions, defense, public safety services, vendors providing critical service and/or products, and critical government functions.
A health order has been issued that requires all residential and commercial construction sites to close by April 1st and remain closed until at least April 17th with the following exceptions:
➤ Internet/broadband providers
➤ Other service providers that maintain the safety, sanitation & essential operation of residences, essential activities & essential businesses
The following types of businesses in the construction sector are considered essential and can continue to operate as normal in Connecticut:
➤ All skilled trades (electricians, HVACs, plumbers, etc.)
➤ Residential and commercial construction
➤ Related construction firms and professionals that are necessary for emergency repair and safety services on essential infrastructure
➤ Construction support activities (planning, engineering, design, bridge inspections, etc.)
You can read more on the State of Connecticut’s actions relating to COVID-19 here.
According to a ConstructionDive article, construction work is being considered essential meaning that the majority of projects will be able to continue.
An executive order was signed by the governor stating that “all public-facing businesses that encourage public congregation or that by the nature of their service to the public cannot comply with the CDC guidelines concerning social distancing are going to have to cease their operations.”
The following businesses relating to the construction sector are exempt from the order:
➤ Home repair
All non-essential businesses were ordered to close by the governor. These businesses relating to the construction sector are exempt from the statewide order:
➤ Building/property maintenance companies
➤ Construction Companies
➤ Construction, medical and personal protection equipment
➤ Utility maintenance services
Under the governor's new executive order, only public construction projects such as wastewater plants, roads and bridges are explicitly being allowed to continue. According to the Press Herald, outside of these some exterior projects are continuing to take place while interior projects are coming to a halt.
Due to a shortage of protective equipment, the governor of Minnesota issued an executive order requiring all health care systems and businesses with health care protective gear must disclose their inventories to the state. Construction companies that have access to protective healthcare gear are included in the order.
Although the governor has urged city officials to lift the construction ban, several cities including Boston have went on to place an indefinite ban on all construction.
According to a ConstructionDive article, so far the following cities within the state have halted all construction:
➤ West Tisbury
Emergency construction projects as a response to the outbreak are the only exception.
According to the Omaha World Herald, The governor of Nebraska has encouraged the continuation of construction projects during the novel coronavirus outbreak. Omaha, in particular, has seen construction and redevelopment sites continuing to run along smoothly, maybe even smoother than before the outbreak.
New construction projects are also beginning to take hold as we approach April. Highway and infrastructure contractors are already beginning to call in their crew to get work started on these types of projects.
According to a ConstructionDive article, the majority of construction projects are continuing to move forward in New York.
“New York State on PAUSE” Executive Order
➤ Skilled trades (electricians, plumbers, construction firms and other related professionals) providing on-site work for essential infrastructure, emergency repair, and safety purposes are exempt.
➤ As of right now, construction firms will not need a special designation to continue on-site work
➤ Only employees that are needed to provide essential products and services can work at the physical business location
➤ Whether all construction work should be exempt from the executive order is still being discussed
New York City
In NYC the Department of Buildings ordered that all construction work be halted, aside from emergency construction (activities needed to ensure the health and safety of building occupants), essential facility work (roads, bridges, transit, utilities, healthcare facilities, transitional housing and homeless shelters), and projects requiring only one on-site worker.
According to a Daily Voice article, when a Bergen County executive proposed the county-wide shutdown of construction companies, the New Jersey governor revoked the order and considered construction to be essential.
According to the Las Cruces Sun News, the following construction sector related businesses will be allowed to stay open in the state of New Mexico:
➤ Childcare for facilities for workers employed in essential services
➤ Infrastructure operations (public works, commercial and residential construction/maintenance)
➤ Safety and sanitation services for residences and essential businesses
➤ Gas stations and auto repair facilities
➤ Hardware stores
➤ Real estate services
➤ Mailing and shipping services
➤ Professional legal and accounting services
➤ Logistics and storage services
Construction businesses are exempt from the state’s Stay at Home order, but some private construction projects are still choosing to halt production on some job sites. The Ohio Department of Transportation has said that road projects will continue due to a low amount of physical contact with others.
According to Oklahoma’s Channel 4 News, construction firms are continuing on-site work, but with added precautionary measures such as social distancing and allowing only up to 10 employees to be working in one area at the same time.
Governor Mandates Closure of Non-Life Sustaining Businesses
➤ Requires the closure of all real estate brokerage firms and nearly all forms of construction including residential, non-residential, utility, highway, street, and bridge.
➤ Healthcare facility construction sites are the only exception currently.
Despite these closures, construction work on the University of Pennsylvania Health System's Pavilion hospital is continuing 24/7.
The mayor of the City of Austin announced a stay at home order that will go into effect on March 24th at midnight. The following businesses relating to the construction sector are allowed to stay open being deemed critical infrastructure:
The order specifies that commercial and general home construction are being deemed non-essential, while projects relating to affordable housing, homelessness and essential government functions will be able to continue.
The AGC and Vermont Agency of Transportation have been working together to establish protocols and systems that would allow road and bridge construction to continue amid the novel coronavirus outbreak.
Despite many other businesses being ordered to shut down, Vermont’s road construction contractors have begun working on projects as a way of getting ahead of potential supply chain problems.
The governor of Washington has released a construction-specific clarification to the state-at-home order. The clarification specifically states that the following types of construction workers that do not provide work relating to healthcare, transportation, energy, defense, critical manufacturing, emergency repairs or publicly financed low-income housing must cease operations:
➤ Sheet metal
➤ Iron workers
➤ Pipe trades
➤ Heavy equipment & crane operators
➤ Pesticide applicators
➤ Cleaning/janitorial staff for commercial and governmental properties
➤ Security staff
➤ Operating engineers
➤ HVAC technicians
➤ Moving/relocation services
➤Forestry & arborists
The governor of West Virginia has ordered a Stay at Home order to go into effect on March 24th at 8:00 PM. The following essential infrastructure relating to the construction sector will be allowed to remain open:
➤ Utilities (water, sewer, and natural gas)
➤ Coal mining and production/distribution of raw materials including oil and gas
➤ Hardware and supply stores
➤ Businesses that manufacture, produce, prepare, build, store, sell and distribute materials and facilities necessary to respond to the epidemic
➤ The building, construction and other trades that support essential infrastructure
➤ Flood control and solid waste recycling, sanitation collection, and removal
Starting on March 25th at 8 AM, all non-essential business and non-essential travel will be prohibited by the governor of Wisconsin.
Next Steps: How Can We Help?
The Arbeit team is well-versed in working remotely. Due to the non-physical nature of our work, we do understand that it's much easier for us to work from home as opposed to jobs of a physical nature such as construction.
Overall, construction is being widely considered an essential business during the novel coronavirus (COVID-19) outbreak, meaning many firms must continue operating. We want to help you achieve unified communications between on-site workers and support staff, with no location for the two to meet in-person needed.
Whether you are or aren't looking to use our products in transitioning team members to working from home, give us a call so we can point you in the right direction of advice & tools that may help you out.
Our team wishes your business and team an abundance of health, safety and profitability during these trying times. 💜
Disclaimer: This article is not intended to be medical or legal advice.