10/15/2020

Fall 2020 Update on COVID-19 Impacts and Costs on the Construction Industry

Last May, Construction Claims Advisor published an article on the Costs of COVID-19 on construction (Nailing Down the Costs of COVID-19 on Construction, Vol. 18, Issue 9 [5/15/20]).  This article featured a report by John McConville of Compass International on labor and PPE (personal protection equipment) costs (Impact of COVID-19 on Construction- Reopening the Economy - the next 3 months Part 1).  In the report, Compass found contractors experiencing or expecting a 10%-20% increase in field labor plus $2.25-$3.50 per hour for PPE.  Since then Compass has published two additional articles on the subject.  

 

In COVID-19 the Impact on Global Construction Industry - Part 2, McConville provides a 3-month update based on feedback from the field.  Impacts included 35%-70% of construction projects around the world were shut down, impacting the economies of 185 of the world’s 200 countries.  China, which supplies 20%-30% of construction materials and components to North America and European markets, basically shut down fabrication and production in February and March.  In the U.S., many contractors reduced their workforce by 25%-50% to comply with social distancing guidelines.  

 

As construction started ramping up, McConville sees the 10%-20% manhour increases to be an ongoing factor.  Other forecasted impact including: projects taking longer to complete, general conditions costs will increase, and COVID-19 compliance staff will need to be hired and trained.  Bulk material costs are expected to fall by 4%-8%, while other costs could increase anywhere from 2.5%-7%.  Estimated hourly costs for PPE increased slightly to $2.45-$3.85.  

 

McConville’s highly informative article lays out in detail various impacts along with measures contractors may be taking to deal with COVID-19, such as temperature checks, breaks from wearing PPE, additional cleaning measures and more toolbox talks.  This could result in as much as a three hours non-work time in an 8-10 hour work day.  Finally, McConville also notes the possibility of a second outbreak in the third and fourth quarters and the reality of having to deal with COVID-19 impacts until sometime in 2021.

 

In a third article in the series on COVID-19 published in August, McConville found that on commercial/residential projects it studied, many social distancing and PPE measures were being taking, resulting in little or no loss of productivity.  (COVID-19 the impact on Construction Productivity: A tale of 2 sectors).   For new work contractors and subs are aggressively discounting bids and profit margins to build up a backlog.  Industrial project contractors, however, are increasing their bids 10%-30% to deal with the COVID-19 ongoing impacts.  Meanwhile, stay tuned for McConville’s next report on COVID-19 impacts.

 

Other COVID-19 resources.

OSHA has a webpage with comprehensive and useful guidance for safety measures, controls and training to be applied to various risk situations on a construction project:     

                  https://www.osha.gov/SLTC/covid-19/construction.html

 

The Sheet Metal & Air Conditioning Contractors’ National Association (SMACNA) regularly publishes articles and technical resource bulletins on the COVID-19 situation, including government programs, guidelines for reopening buildings and a COVID-19 Exposure Prevention, Preparedness, and Response Plan.  Click here to access the SMACNA COVID-19 site.

 

A study performed by SMACNA’s research entity, the New Horizons Foundation along with NECA’s foundation – ELECTRI International, found 8.7% of productive hours are lost on a project due to COVID-19 mitigation requirements along with another 9.2% time lost in installation labor. An executive summary of the report is found here. Also interesting is its August 7 webcast Pandemics and Productivity: Quantifying the Impact.

 

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