June 2020

There is no doubt we have all been affected by the COVID-19 pandemic in some manner. We have talked with some of our construction partners to learn more specifically how the pandemic has affected the construction industry. Here are some of things we learned.

Costs

Currently, costs for construction trades and materials is generally stable. Long term however, there are some concerns for the construction industry. In talking with several architectural firms, they are not seeing much new work and have had many projects get canceled or postponed. This could be a leading indicator. Some contractors are already eager to book work that is scheduled out 6 months or longer from now. The lack of projects being designed today will lead to fewer projects being built in 6 to12 months which will put pressure on contractors to start pricing work more aggressively. We have not seen that occur yet, but we may start to see that happen later this year.

Schedules

Generally, contractors have been doing an exceptional job keeping projects on schedule with the new environmental challenges. Some work days were lost during the onset of the pandemic with companies trying to navigate the CDC’s ever-changing guidance, and some work days have been lost when sites shut down as a precaution when an employee falls ill or tests positive for COVID-19.

Another contractor challenge is how to manage the health and safety of third parties visiting construction sites such inspectors, architects, building owners and their interaction with the trades people. Many contractors are not allowing third parties to come on site. In addition, some cities are not allowing inspectors to make on-site inspections and have approved inspectors to conduct video conferencing and live video inspections. This change in protocol has greatly helped contractors keep projects on schedule. However, not all cities are adopting these techniques and project schedules are being impacted.

Material Supplies and Lead Times

Materials from overseas have become harder to get due to factory shutdowns and shipping restrictions. For example, imported porcelain and ceramic tile from Italy has been delayed. There are also delays occurring for mechanical and electrical equipment and components made in China, Mexico, Germany, and Croatia. Many contractors are encouraging architects and owners to specify and select products that are made in the USA because there is more control and reliability in the United States material supply chain.

Some U.S. manufacturing plants have been affected by the stay-at-home order and the effect of if their specific businesses was/is deemed as “essential” and allowed to stay open. This has caused general contractors affected by a manufacturer not allowed to work in one state to find an alternative manufacturer in another state where they have been allowed to continue production.

In states where major manufacturers may have been forced to close, lead times for affected products are likely to increase as compared to the pre-COVID environment. Some products that may be affected include mechanical equipment, window and glass systems, and other specialty products. It is best to inquire with your project contractor to check availability and exact lead times for the products you need for your project.

Job Sites

Most contractors and project sites continue to actively build. Contractors have implemented strict protocols following CDC guidelines for social distancing and infection control. Some of these protocols include employees answering a questionnaire about their health status prior to entering the site each day, taking the temperature of people, one-way traffic on stairs and in corridors, crews practicing social distancing techniques as they build and take breaks, and continually washing, wiping, and sanitizing surfaces.

Ultimately, contractors want their employees to feel and be safe while on the job. Some contractors are asking their employees each day prior to entering the site if they feel safe. If someone does not feel safe, they are permitted to stay home, no questions asked. Some employees have been reluctant to work because they do not feel safe because of the risk of contracting COVID-19. However, most employees have a “can do” attitude, are willing to work hard, work together, and are finding solutions for being productive during these challenging times.

Please contact us if you would like to learn more about how MedCraft can help lead your development project through these challenging times and navigating the everchanging world in our “New Normal”.

Contributed by:
Chris Lambrecht
Senior Vice President, Construction and Development
MedCraft Healthcare Real Estate
clambrecht@medcraft.com