Across the Mid-Atlantic region, many construction projects are on pause as part of coronavirus mitigation efforts. The industry experts at RKL have been helping construction companies manage a number of challenges brought on by the pandemic, from workforce management to budgeting and cash flow. Many owners and executives are understandably focused on managing immediate needs and short-term sustainability, but devoting a small measure of time to record-keeping and coding may pay off down the road.
Whenever and however the economy and society begin to emerge from this crisis, there will be renewed urgency to regain lost time and wrap up construction within a condensed timeline. This speed will be significant and it may cause a number of problems for construction companies, including cost overruns, time delays, availability of construction materials and contract funding issues. Companies with thorough and proactive documentation of coronavirus-related costs and labor overruns will be better positioned to negotiate and hopefully recoup costs spent related to these issues that were out of their control and be paid what they deserve.
What to track
Documentation will be the key; it is imperative to track costs and expenses. Collecting and substantiating these costs now will make the negotiating process easier down the line. Consider setting up a distinct coronavirus code for projects affected by the pandemic in different ways, including:
- Overtime hours for the crew to catch up on a project
- Expedited costs for material orders or shipments
- Cost of additional equipment needed to expedite completion
- Downtime due to delays in permitting and inspections (including remobilization efforts)
- Changes in or additional subcontracting costs needed for expedited schedules
- Additional costs to comply with state, local or customer Covid-19 requirements
Proactive pays off
Tracking these costs and hours on the front end of jobs is far easier than playing catch up down the line. Make sure to direct crews to be diligent in tracking in real time. Otherwise, construction companies will be forced to go back through job expense reports line by line and identify what is in or out of scope for each project. If reimbursement issues or contract disputes do arise, your company will be armed with material documentation.
Safety more important than ever
Construction companies will face another, non-financial hurdle when projects start coming back online. Safety is always important, but now more than ever as public health guidelines and social distancing restrictions may stay in place as the economy begins to resume. Beyond government guidelines, clients may have their own specific regulations, so make sure to familiarize yourself and fully comply as your crews return to job sites.
RKL’s construction industry team will continue to identify opportunities for companies to be better positioned as we emerge from the coronavirus pandemic. Your RKL advisor is available to help you implement these tracking procedures or answer other questions that may arise during these uncertain times. Visit RKL’s Coronavirus Resource Center for more insights and guidance.