Have Government changes to the Construction Industry helped keep projects on time during COVID-19?

By TBH Associate Director, and international Claims team member, Steven Spinks

We are all aware of the complications caused by COVID-19’s strict social distancing measures and the effect this has had on the construction industry. Social distancing on site, coupled with site closures for deep cleaning and extended lead times for design and procurement works, has the potential for the construction industry to experience significant delay and disruption.

In an attempt to support this crucial industry, early on in the crisis we saw various state and local governments act to support the construction industry. This included, primarily:

• Increasing work hours by allowing construction on public holidays and weekends;
• Reducing restrictions on construction delivery times; and
• Softening requirements to obtain road closures etc.

Subsequently, as a result of lock down, we also observed reduced traffic on roads. This coincidentally led to reduced cycle times (the time taken to complete a repeatable task – i.e. time for a truck to collect bulk excavation from site, take to dumping location and return to site) and increased productivity for particular construction activities such as bulk excavation works and concrete pours.

So, did it work? Some months later, we are starting to see whether these measures helped offset the potential delay and disruption caused by COVID-19. What TBH has observed is – it depends.

After working with a number of Contractors (from 1^st to 3^rd tier) to determine the impact of any actual disruption experienced onsite, we have found a number of projects experienced no actual delay or disruption, whilst others were heavily impacted. Generally, this was as a result of what phase of construction a specific project was at. Projects that were underway during the civil and structure phases did not experience significant delays and some even achieved greater efficiency than pre-COVID days.

However, in contrast to this, a number of projects experienced significant delays due to discrete items not being available when required. This was typically caused by issues such as international fabricators ceasing works or due to shipping delays and extended quarantine durations. We also observed some projects were disrupted as a result of social distancing requirements.  These delays were the result of a number of factors including:

• reducing the total number of resources able to be onsite due to physical site limitations;
• vertical transport requirements; and
• limited numbers of resources allowed at a specific work front.

Clearly some construction projects are less physically constrained than others (for example a road construction project is less constrained than a high-rise office block).  As a consequence, for some projects that are less physically constrained, the extended construction hours not only helped overcome any delay and disruption that may have resulted from COVID-19, it may have even benefited the Contractor. This has led to a peculiar and unexpected outcome: some Developers / Principals are seeking this benefit to be mutually shared with the Contractor by a reduction in contractual construction durations.

This leads to many questions such as:

• Is this even contractually possible?
• If so, how do you quantify the effect of this in the programme? Is it fair and reasonable to simply adjust the programme calendar?
• If this can be quantified and agreed between the parties, how do you assess any future claims that may arise during later phases of construction that now may be experiencing disruption as a result of COVID-19?
• Will the Developers / Principals share the pain with the Contractor if the Contractor’s agree to share the gain or will the Contractor be entitled to claim for the entirety of the delay and disruption?

The answers to these questions are not straight forward, as we continue to navigate uncharted territory. To assist projects that have been experiencing disruption as a result of COVID-19, TBH has previously produced a ‘4 Point Plan’ of the steps that need to be taken to support a disruption claim. By utilising the same steps, it may be possible to identify any time saving that may have occurred as a result of these government measures. These are:

1. Establish where your project is up to prior to COVID-19 / extended construction hours commencing;
2. Establish and record the impact of:
   1. doing nothing; or
   2. increased productivity.
3. Identify and record the cost and impact of recovery measures; and
4. On-going record keeping.

By quantifying this disruption or time saving, Contractor’s will be in a more robust position to entertain conversations of pain or gain sharing with their clients.

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