By Meghan Hall
Activity in the construction industry has come to all but a screeching halt, as municipalities, in an attempt to control the spread of COVID-19, have instituted strict regulations regarding essential activities. In both the Bay Area and Puget Sound regions, the restrictions implemented have been similar: any construction deemed non-essential has been ordered to stop, and the list of projects that have been allowed to proceed has been growing slimmer in recent weeks. However, according to two experts in the construction industry, those within the sector—while not thrilled with the prospect of slowing or halting operations altogether—have largely rolled with the changes in place.
“I think at this point, most of our clients in the Bay Area, and we do work up within the Puget Sound as well, have really taken it in stride,” explained John Robbins, the managing director and North America head of real estate for Turner & Townsend, a New York City-based professional services company. “Some of our clients made the decision, even before the government or local authorities put a stop to what has been termed non-essential construction, and as good clients and good citizens, to shut down some of their construction sites to really respect some of the social distancing policies that were being put in place.”
Now, most projects save for a select few have been deemed non-essential. In the Bay Area, shelter-in-place orders became more restrictive under new directives extended to May 3rd. Currently, only projects related to essential infrastructure—airports, utilities, public transit—health-care related projects, or projects that provide at least 10 percent affordable housing or critical homeless, elderly or disabled services, are allowed to proceed in the San Francisco Bay Area.
“Some of it is still being addressed in the field; the jobs which were being built that were deemed essential under the previous shelter-in-place order and do not qualify under the new order are winding down and being secured,” said Paul Aherne, legal counsel for the Construction Employers’ Association, which represents union commercial building contractors across Northern California. “Depending on the size and complexity of the job, that may take some period of time.”
In the Puget Sound, similar restrictions have taken place, with Governor Jay Inslee calling for a halt to all non-essential commercial and residential construction at the end of March. Projects permitted to move forward under the new guidance also include public works or critical infrastructure projects, publicly financed, low-income housing, as well as projects already under construction whereby halting processes could damage the integrity of the structure. And, just yesterday, Seattle Mayor Jenny Durkan announced a two-day pause on even public works construction in an effort to conduct health and safety training for those still on the job.
Owners and project teams of developments that are permitted to proceed, stated Aherne and Robbins, have been working to implement a large number of new safety measures to protect crews. In addition to some of the basics, which include increased sanitation stations, social distancing, site sanitation and PPE, many firms are implementing health checks, making sure that employees use separate sets of tools and getting creative with scheduling. On-site safety coordinators can pull the plug on part or all of a project if any number of measures are not being met.
“We have got to continually monitor and enforce the safety plans that we have,” emphasized Aherne. “One of the things we saw recently is that the employees coming onto the site are good at social distancing, but a lot of them commute collectively. We have asked them [to do that] separately. They’re willing to embrace it, but they have to be shown that it is going to work for them.”
Project teams that have been forced to stop construction are also getting creative, and are looking for ways to keep employees on board or their companies afloat. While Robbins acquiesced that some firms are furloughing staff to keep them afloat, others are doing what they can to keep their employees busy.
“I think the general rule has been to keep as many people as they possibly can and to keep them busy,” said Robbins. “Especially for construction, there’s such a large and administrative paper side behind most projects, so they have diverted their attention to submittals, payment, requisition, etc.”
Other firms are cutting pay; in the case of Katerra, for example, a tech-based offsite construction firm, the company’s CEO has cut his salary to zero. Other higher-paid employees are also taking cuts.
However, depending on how long shelter-in-place orders last will determine the viability of many companies moving forward.
“I do think if this goes more than a quarter, that’s when the real pain and pressure will start to be felt by the contracting community,” cautioned Robbins. “…A three month period is about as long as a business can sustain in the general contracting world if they cannot start work onsite again and get their people busy.
Smaller and mid-sized firms, or firms that have had multiple projects grind to a halt—as opposed to firms with projects in various phases—will likely be the hardest hit.
And, once construction does start again, numerous questions will have to be answered. Will health and safety regulations remain in place? How will the supply chain be impacted in the long-term?
“I think we are projecting that when construction resumes in earnest, it will probably be office-type space. There is concern around the hotel and retail sectors, as we all know,” said Robbins. “Just given the high level of disruption they have undergone in the United States and elsewhere around the globe, there is concern about labor shortages; with construction all starting back at once, who is going to be first in line? Who will be quickest out of the sprinter blocks?”
For now, according to both Robbins and Aherne, one thing is clear: like many other sectors, the construction community is doing everything they can to weather the storm.
“[Those in the industry] are certainly not happy that their projects have come to a stop, particularly those that are in construction, but they also realize the whole world is in this together,” said Robbins. “We will come out of it. Most questions now, I think, are what we can be doing now to restart construction.”