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Refreshing Insights

No one has immunity to the novel coronavirus COVID-19, nor is any company immune from the business challenges the virus has left in its wake.

Nonessential businesses have had to close their doors and furlough or lay off workers, while essential businesses continue to adjust operations to comply with COVID-19 workplace safety, social distancing and employee leave requirements.

We know that COVID-19 won’t be eradicated anytime soon, so as we begin down the path of reopening the state, it’s helpful to consider some industry best practices that will help drive future success with COVID-19 along for the ride.

Prioritize Employee Health and Safety

The importance of ensuring workers’ health and safety on the job isn’t a new concept for the construction industry. In fact, it is very likely you already have a safety program in place to lower accident rates and ensure compliance with regulations.

In addition to the regular safety regulations and checklists, both the Occupational Safety and Health Administration (OSHA) and the Centers for Disease Control and Prevention (CDC) have produced interim guidance for maintaining safe working environments through COVID-19.

Among the general workplace safety considerations during COVID-19,  there are a few specific notes for the construction industry.

  • Some projects are experimenting with adjusting the subcontractor schedules so only one sub is on a jobsite at a time. For example, instead of allowing electrical installation simultaneously with HVAC, the subs are given alternating time slots.
  • Keeping sick employees from reporting to work can present an additional communication challenge in some company cultures.
  • Sick leave policies may require some tweaking to comply with provisions of the Families First Coronavirus Response Act.
  • Specific safety requirements and protocols are more likely to be included in construction contracts for the foreseeable future.
Carefully Study Bids and Construction Contracts

While construction companies can expect to see some slowdown for projects that lose funding or potentially put the public in harm’s way, construction bidding has not yet slowed in the public sector. In fact, contractors should prepare for the bidding process to be forever altered with an increase in electronic submissions and remote presentations. 

With the distinct possibility of future project delays and cancellations related to COVID-19, it is especially important when bidding to take care in studying the specs and full scope of a project when considering your timeline and backlog. You need to determine your comfort level with the project and submit a bid that aligns with your capabilities and knowledge.

Once you’ve landed the job, diligently review the contract to ensure you’re fairly represented, especially when working with a new project owner.

Prepare for Increased Surety Scrutiny

In the surety market during and post-COVID-19, underwriters are likely to intensify scrutiny of the financial stability of contractors due to the increased likelihood of project delays, cancellations and the potential for a far slower economy.

For a contractor to qualify for a bond, insurance companies typically examine the contractor’s financial statements, project history, staff and equipment.

Contractors should be able to show that they are financially prepared for slowdown in construction by carefully documenting operational costs, profit and loss; keeping money in the company; avoiding debt; and delaying nonessential equipment purchases.

Additionally, for the foreseeable future, contractors should prepare to provide documented plans and details about projects and how potential issues will be resolved. An underwriter might ask to see contractual clauses relating specifically to:

  • Business continuity plan
  • Indemnification agreement that addresses COVID-19
  • Project extension as a result of COVID-19
  • Dispute resolution

It’s critically important, possibly now more than ever, to protect your company (and those who work for you) from excessive risk when you sign on the dotted line. Our Construction Contract Checklist will help you navigate through the most important sections of the contract. 

Construction Contract Checklist CTA1

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A collection of articles from the McClone team with the helpful knowledge and insights to ensure your organization is well protected.