In our previous article [click here for the link] we spoke about the effect the shutdown may have on construction projects. Since then both industry and academia has agreed that the shutdown was a Force Majeure event [that the event was beyond anyone’s control; could not have been provided for before entering the contract; once it arose the parties could not avoid or overcome and was not substantially attributable to either party]. The fact that this became a relevant event, opened the door to a justifiable extension of time claim. Unfortunately, this type of event, while allowing the contractor additional time, because it isn’t attributable to the other party [i.e. the client’s side] doesn’t allow for the contractor to be granted costs. The grounds the contractor can seek costs will be dealt with in a subsequent article.
What we are focusing on here is the cost the Covid measures are placing on the contractor and by extension, the construction industry. These costs are both tangible and intangible.
The tangible costs [the ones we can identify and quantify with a value] are the obvious ones. Among them are:
- The hand washing stations at the entrance to the construction sites. This is not JUST the sink, but the sink, the taps, running both potable water and waste water lines to a location that on face value is not practical. Oh, and let’s not forget the liquid soap please, like some sites do. And maybe paper towels too to dry your hands?
- The infra-red thermometer gun required for the temperature checks for entrant screening. While there is a school of thought that says using fever as a screening tool for COVID-19 may provide a false sense of security[1], the fact that this is a common feature to most construction sites.
- The masks for the employees. Under the OSH Act it is the employer’s duty to provide adequate and suitable PPE to the employees at no cost to the employee.
- The signage. The signs [like this one below] to be strategically placed around the site. This is in addition the usual amount of signage commonly seen in and around construction sites.
- The declaration forms. These assist with the contact tracing. Recording all the persons entering the site, the taking and recording of their temperature and their contact data.
Then there are the other tangible ones that are not as visible.
- Like the isolation rooms. The site has to provide an isolation room in the event of a person begin to display symptoms.
- Additional lunch rooms / eating areas. This is to ensure the social / physical distancing among the workers is able to be maintained.
- Additional change areas. Again, this is to ensure the social / physical distancing is able to be maintained.
But what about the intangibles. Those costs not easily identifiable or quantifiable. These include:
- A reduced rate of working. As a result of trying to maintain the social / physical distancing, could this not affect the gang size and thereby affect the output. Smaller gangs, lesser output, slower progress, longer construction schedule?
- Loss of productivity as a result of quarantine protocols. According to the protocols, if a person in a household contracts the virus, all persons in that household has to quarantine. Or if the worker is suspected of coming into contact with some suspected of being infected with the virus.
- The dedicated site personnel to administer these protocols. It is expected that there will be a dedicated person on site doing the procedures, recording the information and tracking the procedures. This is another cost to the contractor.
We need to state here that we are neither against nor complaining about the covid / quarantine protocols but merely noting the cost impact these may have on the construction project. From the additional first cost, then there is the slower than expected rate of work, or the loss of key workers as a result of the quarantine protocols, the impact these may have on the productivity of the construction site.
For new contracts currently being let the contractors are being given the opportunity to price for these items. But this is being done in a highly competitive environment, so is the true cost being actually revealed? Or are contractors hiding or swallowing some of these costs in an effort to be competitive? We are currently in the process of researching among our colleagues to acquire primary data as to the effects of covid-19 is having on the construction industry. We hope to share the results of that research when they become available.
[1] https://www.theatlantic.com/health/archive/2020/08/paging-dr-hamblin-temperature-checks-coronavirus/615190/
