Protect Your Construction Project from Problems Related to Coronavirus

March 16, 2020 | David M. Grill | Jeremy B. Honig | Pia E. Riverso | Construction

The impact of COVID-19 on construction and development is evolving each and every day. Issues have arisen, and will continue to arise, with respect to maintaining project schedules, safety concerns, and learning of and complying with the rapidly changing rules, guidelines and regulations that are being implemented on a daily, and even hourly basis. Checking local resources for updated postings and announcements is vital, including notifications from the New York City Building Department, OSHA, the State of New York and local municipalities.

Owners, developers, contractors and subcontractors should communicate with each other now to discuss plans to reduce the impact of this crisis on ongoing projects, including implementing guidelines for (i) staggered work schedules; (ii) reduction of the number of workers on a site; (iii) safety concerns with potential exposed members of the workforce; (iv) potential labor and material price escalations; and (v) hygiene and daily maintenance. If any instructions are given or decisions made as to the project schedule, acceleration, out of sequence work or the like, all directions or agreements should be confirmed in a written document signed by all impacted parties. Likewise, all parties should review contracts for delay notification requirements and designate an employee to ensure all deadlines and notice requirements are being complied with. Immediate steps should also be taken to develop a recovery schedule plan, if necessary, to compensate for any reductions in workforce, material delivery delays or delays in completion dates. This is not the time to assume this crisis is, or is not, covered by a “force majeure” or “unavoidable delay” provision in a contract. The best course of action is to discuss the issue now and mutually agree to a plan to minimize any anticipated or actual delay and any escalation in labor or material prices.

Owners and developers should also commence discussions with lenders or financial institutions to advise of projected or anticipated delays and make necessary arrangements to continue financing for ongoing projects.

Also, insurance brokers or insurance personnel within the company should be consulted and insurance programs reviewed to determine if project delays or other losses caused by this unprecedented situation are covered by your existing policies. If there is a doubt as to whether coverage is available, brokers or insurance personnel should be instructed to provide notice under any policy that could potentially cover the loss.

Rivkin Radler is available to you to discuss the particulars of your construction or other business-related issues including employment and labor issues, delay claims, financing and the like.

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