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What it takes to proactively continue projects impacted by COVID-19

Many contractors have been shuttering operations in order to prevent transmission, adhere to the rules of quarantine and deal with stay-at-home guidelines. In the unprecedented series of events that have unfolded as a result of COVID-19, businesses must also recognize the importance of having comprehensive project restart strategies once such restrictions are lifted.

In the same way that much construction work came to a screeching halt earlier this year, the restart of construction projects will have the same frenetic pace and fervor of activity as the New York City Marathon when the gun goes off. Ideally, construction leaders would like to see a seamless transition to simply pick up where they left off.

Realistically, even if the restart was to occur a mere 7 days after a work stoppage, activity would not resume normal function for any number of reasons, ranging from supply chain disruptions to new work rules surrounding hygiene. Construction projects will resemble the trajectory of a super tanker in the ocean trying to turn, rather than a high-performance sports car turning a corner on a dime.

 

 

The construction firms that have a proactive restart strategy for all of their projects will be the most successful in achieving superior results and successful mitigation of disasters related to the coronavirus pandemic.

New Normal or Restart?

There are distinct cases, states and markets that have not seen a disruption to construction activity. In some cases, the work itself serves as enough “social distancing.” Even in situations where a complete shutdown has not occurred, there is a new normal affecting the construction project life cycle.

Figure 1

Whether it is signage (shown in Figure 1) that addresses new hygiene protocols or daily cleaning procedures, construction firms will be required to present a realistic and proactive disease prevention plan. Additionally, management of key trade contractors and suppliers will become the next new tactical endeavor. For instance, in Figure 1, there needs to be conscious focus on the proper management of the supply chain.

Both cost impacts and schedule impacts should be carefully examined and measured, regardless of whether this is a trade contractor simply evaluating their material needs for a project or a general contractor evaluating the needs from every trade partner.

 

In the example, the project team can identify any impacts to the critical path as well the overall dollar impact from a variety of angles:

  • Quick shipment and transportation—More than likely, the entire supply chain will have been impacted, and it may not be realistic to assume any quick shipments. However, by targeting specific items, there may be higher priorities to strategize. 
  • General condition impacts—With changes to the critical path method schedule, it is likely the prime or trade contractor will have additional general conditions. Careful examination of all items that are associated with the delay may also provide savings opportunities since some of the delays will be concurrent.
  • Trade contractor impacts—Similar to the previous item, what are the extra costs from a trade partner, particularly in the case of accelerations?
  • Labor histograms—Once again, whether internal or external, what are the short- and long-term impacts to the overall labor pool? Figure 2 below illustrates an example of a labor histogram. Do these labor projections account for instant 100% utilization and efficiency, or do they reflect a more realistic incremental view of efficiency?

Figure 2

The Restart Strategy

For the vast majority of construction projects that have been forced to shut down production in the short term because of the pandemic, careful consideration should be given to the critical restart. In fact, the best approach for your management team is to view this restart as a second chance at proper preconstruction planning.

Assuming a contractor has properly reviewed its contract documents and maintained proactive and current dialogue on force majeure and other work stoppage guidelines, it will be important to examine the restart meeting agenda to ensure that discussions are forward-thinking to identify potential rocks in the road.

While the restart meeting may seem simplistic in nature, the focus areas include both developing realistic solutions to problem areas as well as establishing firmwide consistency on all projects in the “work in progress” category.

 

Figure 3

The Curves

With planning complete, the management team must also examine several financial curves to gauge the stability of the construction project and ensure successful profitability. First, it will be important to reestablish the rolling 12-month billings projection. The curve in Figure 3 illustrates the curve and assumes a project restart from the initial commencement, but it is more likely that a restart will distort the entire curve, especially if it is at 50%.

Managers must overlay not only the projected billings but also the overall cost impact which should include an impact to productivity. Figure 4 illustrates a simple deviation of 10% to all costs on a project. While it is unlikely that all direct costs are impacted uniformly, construction leaders must create a model that shows the short-term impact to material shortages, labor inefficiencies, trade contractor support, equipment shortages and more.

Figure 4

Up to this point, the focus has been on establishing a strong baseline for the project restart. With the internal machinations complete, the project management team can focus on client management and clear communication. The focus of the client strategy meetings can include:

  • Pending changes to the design—What are the short/long-term impacts to the facility/structure due to COVID-19? For instance, if this is a school or public assembly area, will the client and/or end user wish to modify any aspects of the design?
  • Long-term ramifications to the project—With a clear picture outlined in the restart meeting, the contractor or trade partner can describe the overall impact to the critical path and a realistic mitigation plan.
  • Proactive safety plans—Lastly, the contractor can outline its new personnel guidelines on jobsite hygiene, safety and worker accountability. Keep in mind, standards will continue to morph in light of what is known about the pandemic, but the contractor can establish proactive standards of care.

 

Figure 5

The Finish

The hope after the initial shock of these restarts will be to assume the normal trajectory. Careful monitoring of the schedule and adherence to the budget will be critical. The project team would be best served to religiously adhere to project exit strategy plans.

The concept of the exit strategy remains the same—driving the project toward a thorough and profitable completion. The critical changes to this process will most likely revolve around final cleaning standards (see Figure 5). Establishing those cleaning standards early on in the process in conjunction with close-out/deficiency list/punch-list processes will prevent many difficult conversations from happening. The contractor must engage with the customers, end users and design community to address the uncertainty around acceptable standards.

With each day, new data is learned about COVID-19, the affected communities and the builders and projects that all fall under the shadow of this invisible specter.

Never before have construction projects on this scale required a simultaneous restart. Contractors who approach the restart with judicious care and a proactive approach will avoid a dangerous slip at the starting gate.