COVID-19 ALERT – VOL 1 (4/20)
First and foremost, the Construlegal ® family wishes good health and safety for each of you, your family members and other loved ones, during the COVID-19 pandemic.
While it is true that members of Construlegal ® , united as allies over the last 10 years, have been on the leading edge in providing legal representation to contractors and other professionals in the construction industry and have been involved in some of the largest, riskiest, most important and complex projects in the Americas, the challenges that the construction industry, as well as the rest of humanity, face today as a result of COVID-19 have never been faced in modern history. COVID-19 has signiﬁcantly impacted every sector of commerce, including every participant in the construction industry.
At the same time, although no one can credibly call themselves an expert on “all the impacts of COVID-19 on the construction industry”, our geographic reach, depth and presence in the Americas allows for and promotes an exchange of information and experiences among the members of Construlegal ® from different countries. The nature of this pandemic permits a critical information ﬂow with lessons learned from locations within Construlegal ® , like New York, while elsewhere in the Americas, the construction industry is still going through earlier phases of the pandemic curve.
We have prepared this Alert, including, in this ﬁrst edition, three articles from our Founding Members, to assure the construction industry that the members of Construlegal ® are providing the best of their knowledge and experiences for the construction industry during these challenging times, and will continue to do so, for a brighter future of progress and successful projects.
We hope you will ﬁnd the information in this Alert to be useful and remain available for further consultations.
The Members of Construlegal
COVID-19: Lessons Learned from the Frontlines in New York, New Jersey, and Around the U.S
A Window of Opportunity For the Americas
Jerry P. Brodsky y Melinda S. Gentile Peckar & Abramson, P.C
firstname.lastname@example.org / email@example.com
While the COVID-19 pandemic continues to impact the construction industry as a whole, the geographic location of projects and business operations, like the expansion of the virus itself, is in many ways inﬂuencing the impacts and resulting conditions for those projects – whether public or private, large or small. This COVID-19 Alert for general contractors and others in the construction industry identiﬁes and summarizes key issues, challenges and conditions impacting the industry in New York and other areas hardest hit by the pandemic in the United States, in order to share information and experiences with those in locations that are not as far along on the pandemic curve, so they can better plan and prepare.
The construction industry has a ﬂeetingly short window of opportunity to learn from the experiences of those in the most affected areas in order to avoid and mitigate losses and impacts, and better prepare to adapt and succeed in a changed world. With the intent of maximizing the opportunity during this short window, this COVD-19 Alert focuses on the lessons learned in New York (where a state-wide order mandating the shut down of non-essential construction projects has already been issued and was followed by additional guidance), New Jersey and other locations where the pandemic effects are most widespread.
Two of the issues which are causing the most uncertainty for the U.S. construction industry in response to the Executive Orders, Rules and Regulations issued in response to the COVID-19 pandemic at the federal, state and local levels are:
a) the extent to which construction is deemed to be an “essential service” which projects are allowed to continue operating
b) the manner in which those projects which are allowed to operate, must do so safely and in compliance with new safety requirements and restrictions
Essential business designations within the orders may enable certain projects to continue but to what degree is it “business as usual”? In the United States the “new normal” includes guidance from the Center for Decease Control (CDC), Department of Homeland Security (DHS-Cybersecurity and Infrastructure Security Agency), Occupational Safety and Health Administration (OSHA) and other state and local agencies for keeping a project safe under these extraordinary circumstances. Beyond new requirements enacted in each location which have a signiﬁcant impact on operations, there are also numerous additional factors to consider that must be addressed to keep a project active: contract terms, notice issues, possible suspensions, employment, additional costs for labor and materials, and many other concerns.
As of March 27, in what may be a sign of things to come to other locations all non-essential construction job sites in the State of New York (i.e. everything except for public works, transportation, infrastructure and hospital/medical facilities) that had previously been allowed to continue operations, were ordered to shut down. Thus, issues relating to and consequences of suspension of operations are currently being experienced in New York.
The circumstances attendant to the myriad issues the construction industry is facing, and will continue to face, certainly are unlike normal project or contract challenges, and, while as an industry there may be no prior experience in history from which to draw for guidance, the pandemic curve creates the opportunity to learn from the experiences in one geographic location for the beneﬁt of those in other locations, and while what may have been the right response in New York and other signiﬁcantly impacted locations may not be the right response in another location, the most important issues being faced, and the guidance being provided by P&A in response to-date are:
1. You’ve Been Suspended – Were you Ready?
Contractors and owners across the United States are scrambling to comply with mandated governmental suspensions and other restrictions. If your jurisdiction is currently not under a mandated governmental suspension, it is certainly possible that this will happen. Companies should already be taking steps and have contingency plans in place for possible project suspensions or shutdowns. Contractors should communicate with the owner, provide notice, document conditions and actions, and seek clear direction regarding suspensions and other issues, including security, costs and protective work before and during the shutdown. Contractors must also communicate with subcontractors to provide direction based on information received from the owner.
2. Families Response Act.
The Families First Coronavirus Response Act (the “Act”) became effective April 1, and expires December 31 of this year. For more on the Families First Act, we refer you to P&A’s Client Alert on this topic.
3. Employer Guidance Coronavirus Workplace Safety, Employee Screening and CDC/OSHA Compliance.
For now, even if construction sites in your jurisdiction are still allowed to operate, and while this may change, there are steps that must be taken to minimize the risk that a site may be shut down. For construction sites to continue to operate, it is certain that enforcement efforts by regulatory agencies will increase to ensure social distancing and all required safety practices are being followed. Accordingly, for example, in some jurisdictions the use of cones or other indicators to give workers 6-foot separation, and separated stations for hand washing and other personal hygiene and infection control practices are required. Employers should have already established a protocol to identify and isolate sick individuals and encourage workers to stay home if they are sick.
4. COVID-19 Guidance Employers on Virus Screening.
Contractors in the United States and in other jurisdictions must follow applicable regulations (CDC and OSHA in the United States) regarding employee screening and workplace safety. P&A’s Alert on Employer Guidance-Coronavirus Workplace Safety, Employee Screening and CDC/OSHA Compliance can be found here.
5. Planning Now to Prove Your COVID-19 Damages and Delays Later.
Even though projects can continue, at least for now, construction projects may be in a state of uncertainty and ﬂux as a result of the COVID-19 outbreak due to labor, supply or material shortages and related issues. Many contractors are working hard managing new and unanticipated burdens trying to keep people and projects safe; keeping projects moving forward; issuing notices to preserve rights; reviewing contracts for applicable relief provisions; reviewing insurance policies; and digesting new governmental orders and laws, to name a few. These challenges are impacting construction projects at a rapid rate. Contractors must implement a real time plan of action to gather the necessary information you need to be speciﬁc about added costs and time lost. Such real time action will be enormously helpful for contractors to secure time extensions and monetary recoveries. Whether the claim will be made against an owner, insurer or subcontractor, the claim will likely be challenged and any weakness in the documentation used to prove entitlement and impact will be used to the contractor’s detriment. A contemporaneous record showing that the contractor evaluated cost containment and schedule mitigation options before choosing a course of action will make a challenge more difﬁcult.
6. Coronavirus (COVID-19) Guidance for Contractors.
These are certainly not “business as usual” times, but some basic principles of avoiding loss, mitigating impacts, documenting claims and preparing for what’s to come should be implemented, such as: (1) review and ﬁnd relevant contract terms (force majeure, unforeseen conditions, excusable delay, changed work, etc.); (2) provide clear and compliant notice; (3) pay special attention to suspension and termination clauses; (4) document cost and schedule impacts; (5) ensure that contractually required support is created; (6) evaluate whether existing insurance policies potentially provide coverage; (7) analyze subcontracts and other agreements and make sure communications with the subcontractors is addressed in a manner consistent with how that issue should be addressed with the owner; (8) identify challenges early to document mitigation efforts; and (9) revisit job site safety protocols to address possible disease spread and to implement new healthy procedures. When contractors take precautionary and proactive measures, they will stand a better chance of mitigating their risks.
P&A’s COVID-19 Task Force works to collect, assimilate, and process rapidly evolving information from different federal, state and local governments, prioritizing issues of importance for construction companies to assess impacts and continue operations during the crisis. P&A’s COVID-19 Public Action Matrix contains information on recently passed legislation and related orders and guidance from federal, state and local governments and agencies impacting the construction industry. This and all of our resources are updated frequently in response to this rapidly changing situation. As this pandemic evolves, P&A’s COVID-19 Task Force will continue to serve, support, and inform the construction industry.