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Coronavirus Construction Cost Reduction Checklist

The escalating consequences resulting from the Coronavirus Pandemic will drive the US & World economies into an unmatched contraction that could cause serious economic disruption & possible job loss that hasn’t been seen in the last 50 years. Approximately, just under 10 million US construction professionals & workers are employed in the US construction & allied industries, all of these individual will in some way be impacted.

So what are the common sense immediate measures that construction related organizations should make to protect themselves to survive this current problem.

  1. Communicate with all employees on the immediate challenges ahead.
  2. Be prepared for shutdowns of key activities / shelter in place proclamations.
  3. Employ enhanced hygiene cleaning, hand washing & hand sanitizes at offices & construction sites.
  4. Be prepared for significant absenteeism both for office staff & construction workers.
  5. Just about all related home office / administration work should be conducted from the individual’s home.
  6. Cancel non necessary business travel, attending business conferences etc.
  7. Cross train key employees to ensure business can be sustained.
  8. Check if specified construction related products can be substituted & sourced from other suppliers.
  9. Identify & contact alternative S/C’s, vendors & suppliers.
  10. Consider utilizing modules, pre-assemblies, skids & pre-fabricated piping.
  11. Expedite current materials & major equipment deliveries & work around any roadblocks.
  12. Claim an extension of time from your client(s) for a delayed construction completion of the project due to the Coronavirus.
  13. Compile a Risk Management Strategy with Senior Management to mitigate cost increases, identify new & current risks. Pinpoint & augment critical areas which are fundamental to the organizations survival & future success.
  14. Be prepared to have the frameworks in place to compile & issue claims on current construction projects that document increased costs of materials, delays, labor shortages & site General Conditions increases (this includes timesheets, copies of invoices & manpower & construction equipment spreadsheets).
  15. Communicate & issue revised schedules & revised completion dates to client(s) indicating activity slippages due to this pandemic.
  16. Demand immediate release from Penalty / Liquidated Damages / Consequential Damages clauses.
  17. Does the Coronavirus pandemic impact the ability to have coordination meetings, inspection of the work by local building officials & the performance of 3rd party testing routines? If so, this could be the subject of a claim.
  18. Inform clients of possible inflation spikes, loss of productivity due to social distancing, wearing masks / protective clothing & additional cleaning protocols at site that will impact the cost of the project.
  19. Be prepared to pay early delivery payments with the clients’ approval for quick delivery of critical materials / equipment.
  20. Consider using performance bonds on future projects.
  21. Hold subcontractors responsible for their scope of work. Be prepared to change sub-contractors or to direct hire a specific scope if a sub-contractor goes bankrupt or defaults.
  22. Reduce unnecessary home office overhead & support costs.
  23. Reduce current site field in directs costs where possible.
  24. Do not take on fix price turnkey projects in this uncertain time period.
  25. Consider converting fixed price contracts to reimbursable / day work contracts if possible.
  26. As an example Contract Language should state the current costs included 2.6% inflation for 2020, if costs increase, change orders, unit prices & markup costs are subject to change to reflect actual inflation rates. We reserve the right to increase the bid price due issues associated with the current Coronavirus Pandemic that are realized by no fault of our company.
  27. Document currency exchange rates utilized in bids & estimates.
  28. Consider suspending the construction work if all additional compensation remedies have not been achieved or rejected.
  29. Ensure force majeure provisions are included in future construction contractor or similar language that offers protection to the organization.
  30. Be aware of Federal & State loans & tax holidays that could utilized by the organization.

The Coronus Pandemic is the latest challenge the construction is faced with, hopefully this serious problem will be resolved in the next 2 to 4 months.

2020 Global Construction Costs Yearbook

Compass International's 500+ page publication provides “current” detailed information on construction cost specific to 101 countries worldwide.

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