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Tips For Construction Companies To Get Through COVID-19

There is no getting around government-mandated construction stoppages in their entirety, but that doesn’t mean there aren’t ways for owners and contractors to stay productive or at least proactive, according to Turner & Townsend USA Managing Director John Robbins.

Construction in San Francisco's Mission Bay neighborhood.

As commercial real estate contends with a patchwork of local and state shelter-in-place orders, absence thereof and mandates in between, the construction and management consulting company’s advice to clients depends largely on what phase of work and part of the country they are in.

“Today was filled with client calls where literally each client was at that different stage of adapting to the new world we’re in now,” Robbins told Bisnow.

In markets like the Bay Area and New York, where most construction is ordered to stop, Turner & Townsend, whose clients include Time Warner, Uber and Microsoft, is advising clients in the construction phase to adapt through things like shifting after-hours work to day work.

Owners also ought to scan contracts for thorough understandings of termination and suspension rights and options, he said.

The company is also recommending clients work with their project managers on crafting two schedules — one extending the end date and one minimizing lost time through new incentives or tactics — and then have their cost managers come up with the costs for each.

Even where construction is allowed to continue, like in Los Angeles, social-distancing requirements have slowed work significantly, according to Robbins. A client in LA, where Mayor Eric Garcetti announced noncompliant sites will be shut down, had just spoken with Robbins about the challenges.

“They were talking about — on a high-rise structure — how long it’s taking just to get the labor force up to upper floors,” he said. “It takes forever just to get manpower up to the job site.”

For clients in preconstruction, Turner & Townsend recommends consideration of switching delivery methods from design-bid-build to a construction management at-risk model, where a construction manager acts as a consultant to ownership.

A construction site in Downtown Manhattan in New York.

Beyond the pandemic, Robbins either hopes or expects a raft of changes to hit the construction industry the longer shelter-in-place and other coronavirus containment measures continue.

He advises and expects more companies to use contracts that start including what happens when there are sudden widespread construction slowdowns or stoppages, possibly using words and phrases like pandemic, outbreak or government-imposed shutdown.

Robbins also said it will behoove owners to more proactively manage risk following the containment of the coronavirus. He advises the use of live budgets at every stage of the procurement process and emphasizes the importance of a quality cost manager.

Though he said he expects lower construction costs stemming from the slowdown to be rather short-lived, he thinks it still provides opportunities for owners to lock in more favorable rates than are usually available and for contractors to fill a book of business the rest of 2020 and into 2021 and 2022.

“It gives contractors some surety that they’ve got a book of business that will sustain them and that they can potentially borrow against,” Robbins said.

Still, while national contractors have more resiliency given the variety of markets in which they can still work, small and midsized companies will find it difficult to weather the storm, according to Robbins.

Over a quarter of construction firms had already reported layoffs as of last Friday following widespread work stoppages, according to a survey conducted by the Associated General Contractors of America.

Regardless of company size, Robbins thinks one additional lasting change the construction industry could end up adopting is more collaboration between project partners with the help of more web-based project management, along with other tools to enable remote work.

“Right now, clients, contractors, consultants, we’re being forced to work together in a different way and to communicate in a different way,” he said.

“I hope that can last beyond COVID-19 because I think that could be a real change to the industry. I think it could bring the general construction industry a bit out of the Dark Ages.”