The coronavirus outbreak has affected the economy in general, but each business sector faces unique challenges. Some companies can continue operating with minimal disruption by using digital collaboration tools. However, contractors have few options because most of their work is completed in project sites. They can use remote collaboration for specific activities, such as engineering and management tasks.
Manage your construction project while using the best prevention measures for COVID-19.
One of the main challenges for contractors is protecting workers from COVID-19 in project sites. Some tasks require construction workers to stand close by, making social distancing impossible. In these cases, project managers can reorganize activities to minimize the number of workers in a given area, combined with correct use of personal protective equipment (PPE). Construction methods can also be changed when possible, to further reduce the risk of COVID-19 transmission.
The 2019 coronavirus has also brought financial and legal challenges to construction projects. Prevention measures involve additional costs and time, and many contracts do not clarify how this responsibility is split among owners and contractors. Ideally, construction contracts should promote collaboration among the parties involved. However, lack of clarity can lead to legal action, bringing even more costs and delays.
Using Contract Types that Promote Collaboration
Integrated project delivery (IPD) is a promising concept, which has the goal of preventing waste while minimizing conflict among the parties involved. The IPD method identifies activities that don’t add value to the project, so they can be eliminated. The owner, architect, engineering firm, contractor and subcontractors are all involved from the start of the project, and the allocation of profits is clearly stated from the start.
Since the profit allocation is determined from the start, all parties lose when project issues reduce the available profit. This creates an incentive for effective communication and collaborative problem solving. A confrontational approach causes losses for everyone, and avoiding conflict is in the best interest of all parties when IPD is used.
When conditions are uncertain for a construction project, a cost-plus contract with a guaranteed maximum price (GMP) can also achieve good results. In this type of contract, the owner agrees to pay for all project expenses plus a fee, which can be fixed or percentage-based.
- The contractor makes a profit as long as the real project cost stays below the GMP.
- On the other hand, the contractor loses money if costs are allowed to increase above the GMP.
- In a scenario where the project cost and GMP are equal, the contractor breaks even.
This type of contract splits project risk between the owner and contractor. The GMP provides a safety margin for the contractor to assume unexpected costs, but it also sets an upper limit that gives confidence to the owner. Another advantage of this contract type is flexibility, since project modifications can be handled by simply adding their cost and fee to the project. For this same reason, cost-plus contracts are also useful in projects where the scope is not clear.
Preventing COVID-19 with Construction Technology
The term “contech” is used to describe technological tools for the construction industry, similar to “fintech” in the financial sector. Contech can improve construction efficiency, reducing project costs while making their delivery faster. However, there are also many promising technologies that can reduce the risk of COVID-19 infection.
Wearable technology can help implement social distancing measures in construction sites. When workers are focused on a task, they are more likely to ignore safety protocols or distancing guidelines. Wearable tech can detect these situations, producing audible or visual signals to alert workers. Project managers can also identify trouble spots where safety protocols are missed more frequently, and they can reorganize activities to reduce risk.
Drones and cameras can also be a powerful tool during the COVID-19 outbreak and its aftermath. Architects and project supervisors can simply fly a drone around the project site, instead of walking through. In areas that require constant monitoring, a camera can be used to keep watch without being present.
The combination of technology, collaborative contract types and effective communication can reduce the risk of COVID-19 in project sites, all while using PPE and social distancing. Owners and contractors should be aware of all guidance provided by local authorities - binding and non-binding. The recommendation is using all prevention measures available, but binding requirements can bring legal consequences if missed.