Your construction site has been shut down – Now what?
Your staff is working from home, on furlough or even worse, laid off. At this moment, your first priority should be to secure your business, protect your staff and husband income and resources. I have no advice on how to do that, but I know it’s the very first priority. Even though none of us has ever done this before, you still have a construction project in process. I am advising a couple of non-profit organizations who are trying to find their feet in this crisis and thought I might share my thoughts.
First, if you have a project under construction there are special considerations. There are some things that you should do right away and others that you might do in the next few weeks or months as you prepare to emerge from this.
Do this now. Continue to work with your contractor
- Make sure the site is secure and weather protected. If your area is already locked down, check with local authorities what you can do on site. Determine who has primary responsibility for site security during this period, don’t assume.
- Make sure building systems are working and on vacant mode, e.g. fire alarms and security on, thermostats set very low.
- Continue to have remote project meetings to keep communication open.
Less urgent. Understand your responsibilities and risks
- Check with your insurance broker and your contractor’s insurance company. What are the limits of your property insurance during construction? What is the status of Builders’ Risk insurance?
- Under normal conditions responsibilities under your Owner/Architect are clear. How does this situation change particularly with regard to termination provisions? Consult your attorney sooner rather than later. The same is true of professional services contracts, but less urgent.
- Open dialogue with your lender though they may already be knocking at your door. Have your attorney revisit loan documents.
- Revisit your capital campaign, particularly unredeemed pledges. I’m sure it’s too early for most people to really understand how all this is impacting their financial picture but there will be some impact on philanthropy.
Catch up on work
- Don’t expect things to happen immediately. Businesses are trying to figure out how to work remotely. Some will be more or less agile. Have patience.
- Process all outstanding submittals, RFI’s, Change Orders etc. Address pending or upcoming payments and loan draws. Going quiet on these issues won’t help you and can spur protective actions by contractors and vendors. Work together. Nobody knows how long this might last and you want to make a soft landing.
Setting up for resumption
Take some time to sit back and reassess your operation and the underlying assumptions about the project. The world that we reenter will have changed. In mid-March it seemed that resumption was a distant event, but now, mid-April, I think it’s time advance your planning for resumption. It will take more than a little effort to be ready when the time comes.
If you think the project more or less as it is, should proceed
- Things won’t resume in a smooth manner. Your contractor will be working with their subcontractors but you should reach out to your consultants, vendors and suppliers and open a line of communication.
- The submittal process may be able to proceed. This will put you in the queue when subcontractors can again move forward.
- The supply chain will be disrupted in large and small ways. Your contractor should be working through all subcontractors to establish alternate paths for materials. Make contact with vendors and suppliers outside your construction contract that you are responsible for to evaluate supply chain issues there.
- Depending on where you are in the project, look at ways to reduce scope and cost.
- Revisit your budget. Update everything. Reassess your remaining contingency. Will construction costs in general go up or down? Is this a pause or the beginning of a recession? Regardless of the general cost environment, there will be additional costs, possibly substantial, for remobilization and extended schedules. Engage with your contractor on this issue. Also look at extended non-construction costs.
- Revisit you schedule. I strongly favor taking your best guess and then revising as things become more clear. Ask around and then guess when your project might start up again. Then add something to the existing construction schedule for remobilization. How does that occupancy date impact you? Begin to figure out what to do. Make a schedule of things that you need to do while you are on hold. How can you get that done by your guessed at date. Keep revising this projection as things change.
If you think you need to reassess the project
This can’t be a one-size-fits all solution and depends on the project, how far you are along and how critical this project is to your operation, or, more importantly, the operation with which you will emerge from this crisis. It’s more a financial, real estate, operations and legal issue than a project management discussion. It may take some time before you can assess options.
I am going to stop here for now and post an update in the near future.
I want to thank my colleague Don Young for his review and comments for the update of this post.
Best of luck to all