The May, 2020 Electri International report, “Pandemics and Construction Productivity: Quantifying the Impact,” presented initial findings around the effects of the COVID-19 preparedness on the construction industry. Deemed as “essential,” contractors are part of the group of operations that, through their continued function, fundamentally keep the economic infrastructure from collapsing.
Construction contractors are an adaptable bunch, dealing with changing recommendations and requirements from government officials while continuing to produce buildings, bridges, highways, and other projects. As of May 3, 2020, the report estimates that productivity has taken a 40% hit, primarily due to out-of-scope work (meetings, screenings, orientation, training) and new safety requirements that slow worker output and can double the need for certain machinery to conform to social distancing rules.
Even so, contractors have managed to continue to operate projects under contractually-mandated deadlines and budgets while, according to the study, experiencing a 7% daily loss of labor hours on mitigation activities as shown in the following table of data collected.
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Although the full effects of the COVID scenario have yet to be seen, there are some best practices listed in the report that contractors can make sure they are using all the time, not just during a COVID-type event.
1. Follow notice requirements that are listed in your contracts. Your rights depend on adhering to the contract.
2. Make at least one person in your company responsible to keep track of changes that could be announced multiple times per day.
3. Include the cost of dealing with the COVID scenario in your quotes for work. These costs might include changes in productivity plus the cost of accommodating requirements like health documentation, limited access and screenings.
4. Make sure the delay and Force Majeure clauses in your contracts are fair and that you understand what you’re committing to.
5. If you’re not working on a COD basis, follow up on your accounts receivable promptly. Things can change for some companies overnight, and you could be left with an uncollectible account.
6. Take an active role in managing your company’s cash flow. Check into programs that might allow you to borrow or defer payments. Negotiate with your bank for better terms on your line-of-credit.
7. Make time to manage your business – especially if it’s small – when information is changing rapidly.
8. Save money on technology by planning ahead for employees to work remotely. Don’t wait until the last minute and be forced to purchase laptops and software at higher prices.
9. Diversify your business in more than one market segment to lessen the impact when hard times hit.
10. To make compliance easier in the future, maintain a supply of personal protective equipment and supplies for your staff, i.e. cleaning solutions, face shields, gloves, and masks.
11. Keep the line of communications open for your staff in order to maintain corporate morale. Let them know how you’re going to ride this out.
12. Provide online events to engage your employees, clients and even suppliers during slowdowns. The report used “lunch and learn” events as an example.
Preparing for and reacting to COVID-19 have had substantial impacts on many segments of construction, but, besides safety requirements, contractors may not be able to measure what those effects have been for their specific business. Josh Bone of the National Electrical Contractors Association (NECA) talks more about the Electri International study during episode three of the MEP Masterminds virtual event series.
The Electri International report is a real-world look at the effects of COVID on the industry as a whole and how companies can seek out the opportunities that will help them survive and thrive beyond this event. Examples of these opportunities are explored during the Applied Software MEP Masterminds virtual event series. With such topics as prefabrication, mentoring, collaboration, and embracing disruption, this forum is an ideal online source for learning about the developments and technologies that can help you meet the business challenges facing your company and the MEP industry.
