Risk Management – Restarting the Construction Project (COVID-19)

By Robert C. McCue, P.E., and Michelle N. Delehanty, P.E. Consulting Engineers

The current COVID-19 shutdowns of construction projects across multiple industries all over the world are unprecedented. The plans to begin construction work again will be riddled with challenges such as resource confusion, economic uncertainty, and other environmental restrictions. In the construction industry, for both owners and contractors, restarting the project may come with more dangers than the shutdown.

There is no doubt the shutdown will be considered a “Force Majeure” event in almost all contracted undertakings. This is the second Black Swan1 event to occur in recent history. Lessons from the recovery of the 9/11 attacks can help us understand the far reaching and permanent changes to “normal” times.

But the Complexity2 surrounding this event may be significant. Construction projects and related businesses that serve the industry and environment in which the restart will be conducted may increase the likelihood of failure and disputes far beyond the new mobilization date. The following checklist is meant to help all parties to this first-of-its-kind construction and economic restart.

To be better prepared to return to “normal,” answer the following key questions:

• What was the real status of the project on the day work stopped?
• What documents were available to make this status?
• What was the status of materials in the supply chain when the work stopped?
• Can the project supply chain restart?
• What was the skill level and size of the labor force at shutdown?
• Is the needed skilled labor force now available?
• How long, realistically, does it take to remobilize the construction project?
• What deterioration of installed work has occurred due to the shutdown?
• What is the current and projected condition of the key subcontractors?

Long lead materials such as air handling units, transformers, switchgear, generators, boilers, and specialized controls may suffer from the extended supply chain from other countries recovering at a different rate from their own shutdowns.

In a previous article, we discussed the unique problems that might beset the supply chain just due to the initial China shutdown that occurred in February. These effects will still be felt months into the future.

It would be prudent to anticipate problems from the factors discussed above and assess each one prior to launching into an official construction project restart. A good management approach would be to perform that risk assessment and provide for a clean project restart. This also includes performing an “actual” detailed project status as would be required for a major claim situation because you already have one.

The project status can be determined and illustrated through a Time Impact Analysis(TIA) of the last CPM schedule with supporting key documents such as payment requests, photographs, and meeting minutes. The schedule should be modified for the supply chain impacts that can be identified and any damage analysis of the site conditions. Add to the TIA predicted key activity dates, the mobilization time according to the availability of the labor, and materials and subcontractor health for your geographic location. Be aware that competition for labor will be intense as some who have been impacted may have left the industry permanently.

Since we have not restarted the entire country like this since the end of World War II, the project team should anticipate a moving target of problems and opportunities for the next year, at least.

Demanding that “The Owner is responsible for everything” or that “the contractor must complete at the contract value” is counterproductive to the good of the project and inefficient in the long run. Internal project conflicts and pre-existing contractural arguments will likely make others the beneficiaries of the shutdown-restart process.

MDC Systems has provided project and construction management assistance to the industry for over fifty years.

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1 A Black Swann event has a rare occurrence but an exceptional impact on society. View the article —

2 Complexity is a multi-dimensional series of interrelated problems that cannot be easily determined and resist traditional attempts to resolve and overcome the problems. View the article —