Baton Rouge area construction firms should begin preparing for project delays and potential contractual issues that may arise as COVID-19 continues to disrupt supply chains across the globe.
That’s according to attorney Susan Eccles of Adams & Reese, who is based in Baton Rouge and represents clients in the construction industry. In an alert sent this morning, Eccles warned that coronavirus-triggered project schedule delays could result in delivery delays, accruals of liquidated damages, increased costs and general conditions on top of labor cost surges.
“The U.S. gets 30 percent of its construction materials from China—that includes materials for countertops, elevators, cabinets and some lighting components,” Eccles says, noting the U.S. also relies on shipments of Italian marble. “So you have these supply shortages that are already going to impact job schedules, then you might also have labor problems—let’s say you only have two heavy-equipment operators on a job site, and one of them has to self-quarantine.”
Consequently, Eccles says it’s important for owners and construction managers to discuss potential coronavirus impacts on a project now rather than later—and it’s critical that both parties understand the specific contractual terms and provisions at play. Particularly worth reviewing are excusable delay provisions.
“With a lot of unknowns, owners and contractors will oftentimes assume they’ll figure it out later,” she says. “But when your project is over three years from now and parties are fighting over damages because a project is late or offset, people aren’t going to be thinking about the coronavirus; you’re going to have to go back and see what can be identified as a cost overrun or what caused a delay.”
Contractors might also reasonably anticipate for their projects to be impacted by a stop-work order, Eccles says, meaning they should ensure that all orders, costs of compliance, impact costs and schedule impacts are documented in writing.
Additionally, with an existing construction labor shortage across Louisiana, she says some firms might want to consider using drones to conduct inspections and perform other tasks.
Meanwhile, David Helveston, president of the Pelican chapter of Associated Builders and Contractors, says in a text message that “some capital investment may be put on hold due to market dynamics, but we hope this is a temporary hold and know that this industry will quickly adapt to those changes.”