COVID-19 the impact on Construction Productivity (A tale of 2 sectors)

We are six months in of dealing with COVID-19, it has been major challenge to all Construction related organizations around the world.

The current situation:

As of mid-August, 2020 COVID-19 has resulted in more than 21 million confirmed cases & close to 800,000 deaths around the world.

The virus has created significant problems to the Global Construction sector, compelling many organizations to substantially modify, shut down or severely slow down ongoing construction activities. The world economy & construction sector is in its most unpredictable position since the Great Depression of the 1930’s. International economic growth has slowed down significantly. The pandemic has slammed the brakes on future growth for possible the next year or two. The pandemic has negatively impacted the economies and construction sectors of more than 180 of the world’s 200 countries. A handful of counties have successfully navigated around the pandemic, while many countries have significantly struggled with the virus.

Construction Owners, Architects & Engineering firms, Construction Managers, Contractors, Construction Professionals, Workers, Vendors & Suppliers have wrestled with the impact of COVID-19 for the last 6 months.

This article will focus on issues related to construction productivity: Our findings on Construction Productivity: Construction comes in all types and sectors such as:

(A).Commercial / Residential Construction includes privately funded Single Family Homes, Apartments, Shopping Malls, Supermarkets, Offices, Hotels, School and Warehouse type projects. In the USA this type of construction represents between 50% and 60% of the construction industry.

(B).Industrial Facilities, Process Plants, Refineries, Manufacturing / Energy type projects, Government / State funded Civil-Engineering Roads, Bridges / Tunnel type projects and Governmental Institutional and Military type projects. In the USA this type of construction represents between 40% & 50% of the construction industry.

For this article we are going to categorize the above into (2) distinct categories

(A). Commercial, Residential Construction activities:

We have been observing and discussing cost / schedule issues with more than two dozen Contractors, Estimators, Planners, Construction Manager & other Construction professionals, these individuals are either bidding, estimating or managing more than 30 ongoing construction projects in the USA, Canada, Mexico and other countries.

In addition we studied (7) mid-sized construction projects located in Florida, Maryland & Pennsylvania, a major supermarket complex, (3) single family home projects & (3) large apartment developments, in all cases the construction workforce were not wearing masks, gloves, safety goggles, were not socially distancing, no temperature checks were being taken, it seems like business as usual, no noticeable loss of productivity was observed on these construction projects over the 6 weeks we evaluated these (7) projects. We believe a high percentage perhaps 75% or possibly more of similar Commercial & Residential type construction projects will be executed in this manner across the USA. However there will be some Commercial & Residential projects that will utilize some form of COVID-19 mitigation protocols that will impact worker productivity.

The feedback we are getting at this time is that Contractors & Sub-Contractors are aggressively discounting bids & profit margins to win & build up construction backlog that will carry them through the next 6 to 12 months.

Overall at this time we do not believe construction productivity will be substantially impacted on Commercial / Residential Construction type construction projects.

(B). Industrial Construction activities: (Refineries, Chemical, Industrial Gases, Power, Energy & Pharmaceutical type projects)

Again discussing cost, schedule & productivity issues with more than 25 Contractors, Construction Managers, Site Superintendents, Estimators & Planners involved with more than 20 mid to large sized industrial facilities (Refineries, ASU’s, Power Plants, Industrial Chemical / Gas Facilities & Pharmaceutical Production Facilities) these individuals are estimating, bidding & managing projects in Florida, Texas, Arizona, West Virginia, North Dakota, Mexico, British Columbia (Canada), UK & other overseas locations.

The intelligence we are getting is that many Industrial Contractors & there Sub-Contractors are currently actively lowering & value engineering their proposals & profit margins to gain construction backlog that will carry them through the next 6 to 12 months.

However, these Industrial Contractors & Sub-Contractors are adding anywhere from 10% to 30% (in some cases more) additional direct labor man-hours to their proposals / bids to ensure they capture the ramifications of social distancing, smaller work crews, the permanent wearing of masks, gloves & safety glasses, the required ongoing cleaning protocols, COVID-19 testing at the site entrance & other specified site safety measures that are imposed on them & spelled out in the Instruction to Bidders contained in the Owners Request for Proposal (RFP) / Bid Packages.

These Owner companies are some of the largest Oil & Gas, Energy & Manufacturing companies & will audit & ensure that the required COVID-19 mitigation / safety measures that are detailed in the “Instruction to Bidders” are followed during the construction effort.

We are currently researching the increased cost & extended duration ramifications of Field In-Directs / Division 1 / Preliminaries / General Conditions that have resulted from COVID-19. Field In-Directs / Division 1 / Preliminaries / General Conditions typically represent 10% to 30% of a construction projects budget, so it an important component that we want to dig into. We hope to publish our article in September, any specific data on this subject would be appreciated.

If you have any questions or feedback on this article contact John G. McConville CCP - Operations Director www.compassinternational.net/

Telephone (609) 577 4505 Private E Mail mcconvil@rcn.com

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