by Marty Helly
This is just an observation from my point of view, talking with other members, and reading everything I can find. My observations are based on projects in the Northeast, primarily Massachusetts and New York. The details seem to change every day so this is as accurate as I can be at the time of writing this in mid-April 2020.
In rough numbers, what we’re seeing is this:
For projects already under construction-
- About 30% are continuing to try and keep within their original schedules with only minor modifications to accommodate delays.
- The second 30% is moving along slowly with significant delays anticipated.
- The next 30% have halted all on site activity but anticipate restarting when the government lifts stay-at-home recommendations.
- The final 10% have halted completely and may not be restarted. These are primarily in very early stages however I know of two commercial projects (one retail, one restaurant) that were more than half finished and may not be moving ahead.
For projects in the design stages –
- About 60% are continuing to try and keep within their original schedules with only minor modifications to accommodate delays and coordination from staff trying to work remotely.
- About 20% have halted but anticipate restarting when the government lifts stay-at-home recommendations.
- The final 20% have halted and may not be completed.
I’ve seen a glimmer of hope this week as two clients have had me submit proposals for new work to be designed over the summer and bid next fall/winter.
So what do you do to weather the storm? After you’ve done everything you can to make sure you’re protecting your health and that of your employees, review your own financial situation and your contractual rights and obligations.
First, figure out your cash flow for the next few months on both a best and worst case scenario.
Where your employees can’t remain productive, review your options on participating in government programs to keep people on the payroll versus letting them collect unemployment. Read the fine print and make sure you can meet the requirements if you expect any funds you receive to be treated as grants and not loans.
Next, review all your billings and ensure everything is up to date. Have a candid discussion with your clients. Are their payments contingent upon current revenues or are the project funds already set aside to keep moving forward. Are there modifications that should be considered to allow the project to be completed at a lower cost to help them out. Obviously this is a sensitive discussion. You need to approach it so they understand you’re looking out for their interests as well.
Review your agreements. Most have provisions for delays, work stoppages and closing out whether it is by choice or by an “act of god” or “force majeure”. Know what your rights and responsibilities are and the provisions that govern how things get resolved if things can’t move ahead smoothly. Make sure you comply with any notifications if you have been forced to stop working. For work that has been stopped, document actual dates and why. Notices to your client prepared and delivered diplomatically to meet contractual requirements while maintaining a positive relationship going forward.
After the details have been taken care of, reach out to your contacts and keep the communication lines open. A quick conversation and check on how folks are doing can help us all feel a little more normal and keep each other informed. I’m looking forward to us all moving forward and getting back to being a fully productive construction community. I think we all have to be prepared for what may be a slow return to normal but the more we stay connected the quicker that can happen.