In the early days of the pandemic lockdown, a dichotomy existed between the advice being given by the Department for Business, Energy and Industrial strategy (BEIS) and the London Mayor Sadiq Khan. On 31 March, BEIS boldly stated ‘the government has advised wherever possible, people should work at home. However, we know that for many people working in construction their job requires them to travel to their place of work and they can continue to do so. This is consistent with the Chief Medical Officer’s advice’. This was in contravention to London’s Mayor Sadiq Khan who was strongly advocating that all non-essential (i.e. healthcare) construction sites should close. On the 24 March, he confidently stated that he told Prime Minister Boris Johnson ‘forcibly’ that construction workers should not be going into work.
The reality was that most general contractors, operatives and supply chains made their own decisions. Many sites closed but many stayed open resulting in some shocking images on television supporting the view that social distancing was impossible. Conversely, the opening of the London Nightingale Hospital on 3 April after only nine days showcased what our industry is capable of.
Fast forward a few weeks; many sites are re-opening, as is the supply chain following the easing of restrictions in many European countries allowing manufacturing to recommence. Further support to the industry culminated in the Construction Leadership Council (CLC) issuing advice on 14 April 2020, which gave the construction sector clear site operating procedures on how to protect the workforce during the coronavirus pandemic. We have entered that fashionable world of the ‘new normal’. Sites are open, are being productive and good levels of safety protocols are being implemented by general contractors. But, without doubt, labour levels are reduced, construction is slower, and the supply chain remains compromised. Added to this is the ‘furlough option’, which is being taken up and further reducing the availability of staff both on site and in the supply chain.
At Cushman & Wakefield, we have kept close track of the number of notifications we have received relating to ‘extension of time’ (EOT) claims. To date the actual number of formal claims is limited however, we have received numerous indications of the intention to seek an extension. Each project will need to be assessed on its own individual merits and will very much be determined by the wording contained within the construction contract. The lawyers are going to be kept busy! The advice from the government to keep construction going will be helpful, but ultimately difficulties with resourcing levels and material supply delays are likely to favour contractors. The key question will be who will bear the burden of increased costs of delays, contractors or clients? We are seeing all parties working together collaboratively to seek the best outcome possible for their clients. However, collaboration will only go so far!
For our own part, we have maintained business as usual, as far as reasonably practical. We have introduced strict Health & Safety protocols associated with ‘essential’ inspections, allowing us to complete site, technical due diligence, dilapidation’s and Health & Safety inspections when requested by our clients. Armed with authorization letters from our clients, Cushman & Wakefield and the government, and by car, bike and any other modes to avoid public transportation, our team have been venturing out when absolutely required.
Elsewhere, we have recently achieved practical completion of a major 100,000 ft2 fit out, virtually, with the use of ‘Matterport’ cameras capturing 3D panoramic views of the completed space and the full analysis of commissioning data.
As with the rest of the industry we have experienced a very healthy first quarter when the constructional market was at full capacity. Q2 is looking favourable but the impact of the virus will show itself in the second half of the year when the softening transactional market will flow through into construction. This will result in the tightening of tender returns, as contractors compete for available work. Most contractors are also looking to price in risk and include COVID-19 clauses in their returns / contracts.
In overall terms, technical people are open minded, problem solvers and ready to accept a challenge. My own experience is that as an industry we have collectively adapted well to the restrictions imposed by COVID-19. We are open for business!