COVID-19 is obviously having drastic effects on all aspects of life, and the construction industry is no exception. The virus and its economic impact will almost certainly alter pre-existing plans for owners, developers, general contractors, subcontractors, and everyone else down the chain. While many are understanding of these circumstances, there are ways to ensure you are protected going forward. We’ve prepared a brief list of action-items and issues to think about as you navigate unchartered waters.
1.Review your contracts.
Pull your on-going contracts and locate their delay, force majeure, change order, termination, suspension and other relevant provisions. Many of these may authorize relief if you need it, or be used by your counter-parties to get relief if they need it. Familiarize yourself with your options, and your counter-party’s options to help prepare for what the short-term future may bring.
2. Comply with any time-sensitive notice requirements.
Many contracts, including construction contracts, supply agreements, insurance policies and others, contain strict notice requirements obligating parties to provide notice of certain events or claims. Some of these provisions state that parties waive their right to any relief if they fail to provide timely notice. Even if there is uncertainty over whether to invoke a provision in a particular contract or policy, consider putting the counter-party or insurer on notice immediately to preserve your rights.
3. Document, document, document.
“It’s not what you know, it’s what you can prove.” The old adage is going to prove particularly true in these strange times. Proving delays, labor shortages, supply interruption, and other project impacts tomorrow will depend on the evidence being created (or not being created) today. Be sure you and your team members are documenting, even with a simple email or daily notes, each and every impact you are seeing from COVID-19. The more specific you can be, the better. What materials weren’t delivered? Who didn’t show up to work and why? What did you communicate to counterparties, and vice-versa?
4. Check your insurance coverage.
Many insurance policies include business interruption coverage. These provisions and their exclusions can be complicated and insurers will undoubtedly invest heavily in protecting themselves as much as they can. Review your policy now, contact your attorneys or your broker and learn about any potential coverage you may have and the boxes you may need to check to recover it. Additional information on key insurance issues is noted in our article: Insurance Questions Loom as Businesses Brace for Financial Effects of COVID-19
5. Think carefully about your next contract.
Before you sign on the next dotted line, confirm the contract has the protections you want and need – does it contemplate impacts of the coronavirus? Does it give you enough protection where you think you’ll need it? What does the force majeure provision say? What delays are excusable, what are not? When are changes authorized? Are the notice provisions reasonable? Will you be able to terminate or suspend work if your entire team falls ill? Be sure your next contract isn’t your last.
6. Anticipate operational problems.
Each part of your work will be affected differently. Administrative tasks might be easily completed from home while supply chains may be severely limited by a reduced and quarantined workforce thousands of miles away. Think about the different aspects of your business and on-going projects. Try to identify the most likely impacts and try to get out in front of them.
As those in the construction industry face these uncharted waters, our team stands ready to help navigate them.