COVID 19 otherwise known as Coronavirus was declared a global pandemic on March 11th, 2020 by The Who- (World Health Organisation). This global pandemic has had a significant impact on approximately all business concerns and the Real Estate and Construction Industry is no exception.
A number of countries imposed state of emergencies to help contain the pandemic by imposing travel restrictions and closing its borders. The direct effect of these on ongoing construction activities is as follows:
-Shortages of manpower/labour for the works due to home to work travel restrictions
- Shortages of materials due to disruption of supply chains
- Banning of gatherings of groups of people.
In some countries, there was complete suspension of all construction activities. Some others also gave concession to essential providing businesses like the food and home-supply industries. Also, support construction activities for COVID19 were allowed to operate but largely and generally, the apparent impact of this global pandemic on the Realestate and Construction sector is "Project Delay and Disruption of Project Timelines".
What does this imply?
Events like the COVID19 pandemic are not largely provided for in construction agreements as they fall into the category of unforeseen events which are termed "Force Majeure" in contractual terms which will in turn lead to claims for additional time and cost.
Next Steps / Lessons Learned
Firstly, it is important to communicate even if it is a glaring situation to the stakeholders of the project (prioritizing the project sponsor in this communication). Indicating what the situation is and how exactly the construction contractor plans to save time and costs during the pandemic period in the following areas:
Method of Construction: During and post COVID, off-site construction of elements of the building maybe explored through modular and prefabrication technologies to help save time and resources.
Project Schedules and Timelines: During the pandemic, outstanding approvals on processes or materials to be used may be sorted, Work items that do not require physical presence of manpower may be carried out, make early RFIM (Request for Information and Materials) where necessary.
Contracting: Adopt mutual risk and reward sharing contract options with subcontractors to ease up, reduce risk and improve on delivery of project timeline.
Health and Safety On-site: Plans should be made on how to properly strengthen the guidelines for HSE at site in order to curb and reduce the spread the COVID19 virus and Post-COVID should be implemented.
Improvement of Contract Provisions: Post COVID, the Realestate and construction sector should provide for eventualities like this in future contracts that will help in the relief and minimizing of dispute/claims.
Generally, aster are different forms of contracts, it is important that every construction contractor looks into their contract properly and see what the provisions of unforeseeable events are in cases like this, if possible see advice where necessary and reasonably request for any appropriate compensation as regards time and or cost.
Post COVID, to be able to save time and resources better, The Building Estimator should be deployed to properly forecast on your material and labour requirements for your project. Also, we offer free advisory services based on how you can improve on your processes.
1. KPMG- Reviving the Construction sector post COVID 19