Trisura offers additional tips for contractors

As the COVID-19 pandemic continues to pose global heath and economic issues, Trisura Guarantee Insurance has shared tips for construction contractors who intend to bid on new work, or are entering into new contracts amid the outbreak.

The company’s tips are a follow-up to its previous advisory, which dispensed advice on how contractors can minimize the coronavirus’s impact on their existing projects.

Read more: Trisura issues coronavirus advisory for contractors

Trisura offered a reminder that force majeure clauses in construction contracts are not going to be very useful for new projects, since only “unforeseen” circumstances trigger the clause and COVID-19 can no longer be classified as an unforeseen risk. This means contractors must take different steps to protect themselves.

Contractors should also not expect that the impacts of the outbreak will allow them to be relieved of their obligations, Trisura noted. This means clauses that would discharge the contractor or negate any default allegation related to COVID-19 should not be expected to appear on construction contracts or surety bonds. All parties should prepare a project risk matrix so that everyone understands the risks and responsibilities.

When determining their price and proposed schedule for the new project, contractors must review all potential impacts. Contractors should ask the owner or a project’s representative the right questions, such as what happens to the project schedule if a government body mandates the site’s closure, or what happens if the required materials are delayed?

Other questions worth asking owners include:

• What happens if construction work is allowed to proceed but only when workers are a certain distance apart, but the work required for the project necessitates working in proximity?
• What happens if too many people become ill such that required labour is impossible to procure?
• How can a contractor provide updated schedules if subcontractors and suppliers are unable to provide the necessary information given the current circumstances?
• Will owners and owners’ representatives be attending on site as required by the contractor; and if not, how will that be addressed?
• Will the contractor be compensated for the additional project management time to continually re-assess and reschedule the project more than normal?
• What if proper safety supplies are not available to allow contractors to meet the guidelines established by the local Public Health Units and the applicable Ministry of Labour?
• What if workers fail to show up to work due to fear of the virus spreading or notice of confirmed case on the project site?
• What if testing and inspection agencies do not issue proper permits nor come to the required inspections?
• What if equipment or repairs and parts from dealers or manufacturers are unavailable?
• What if critical services to the site are interrupted, such as those of cleaning crews and sanitation and waste services?
• And in the worst-case scenario, what happens if the event of sickness or death of a key project member for any party (owner, contractor or designers)?

Pricing the work done is another matter; contractors should not assume that the project’s cost increases due to the pandemic will be covered by others. Some considerations must be made, such as:

• Cashflow needs of the project, accounting for the delay in certain receivables.
• Extended duration of projects, which could lead to increased overheads.
• Site security and project protection costs in the event of site shutdown.
• Increase in labour costs due to shortage of qualified people.
• Increase in material costs due to increased shipping costs, manufacturing reductions, unavailability of raw material.
• Subcontractors and key suppliers might be more likely to default – performance security measures should be considered.
• Health and safety costs due to the pandemic.

During the work, Trisura recommends that all parties maintain good communication with each other to minimize impacts. The tip rings true for all occasions, but it is especially relevant in this difficult time. Other considerations for when the project starts include:

• Organizing and documenting such communication as well as the status of the project constantly, including project schedule updates, will be extremely important.
• Any verbal discussions should be confirmed contemporaneously in emails. Contractors should consider adding an additional project-specific email address (with access by key employees) to copy correspondence sent by individuals in order to document chronologically and manage the challenge of people working remotely.
• Photographs and videos of site conditions should be produced regularly and especially as issues arise (including potential lack of productivity due to the limits of social distancing). Ensure they are dated, include proper descriptions for future reference and saved to a company server that is backed regularly.
• Remote project surveillance is something becoming more available for live feeds of the site and to document the status of work over its duration.
• Site personnel must be diligent at maintaining a project site diary daily given the circumstances. Entries should be made multiple times during the day so the multitude of issues arising daily do not get missed.
• Project schedules should be updated more regularly and even informally (such as using a two-week look-ahead by work area), but should still tie back to the overall master schedule to support future impact claims. If necessary, engage the services of external consultants to aid with the additional workload and anticipation of future claim preparation.
• Contractors must also consider heightened health and safety protocols as recommended by the relevant authorities (which will likely include additional cleaning staff and supplies).
• Back up project records and ensure they are not stored on stand alone company computers or home computers.
• Consider using document sharing services to collaborate on issues.