Blindsided by COVID-19

Posted on March 15, 2021 in: Technical

Jim Klinger, Concrete Construction Specialist, The Voice Newsletter, March 2021

Veteran concrete contractors will tell you one of the worst parts of getting blindsided is that you never see it coming. And so it is with COVID-19. How many are there among us who left World of Concrete last year without collecting our personal copies of “The COVID-19 Owner’s Manual” that explains how to navigate the latest obstacle course of government regulations, unpredictable project shutdowns, safety protocols, disruptions in the supply chain and other pandemic hurdles we didn’t see coming, yet that continue to financially impact our businesses?

Even more to the point, are concrete contractors entitled to compensation for delays and other COVID-19 cost impacts? If so, who will be funding the entitlement? Owners? Insurance companies? The taxpayers? How should a request for equitable adjustment for COVID-19 impacts be packaged, and when should such a proposal be submitted? Are we really adrift in uncharted waters here, or is this simply a variation of the standard construction project delay claim theme?

Over the past year ASCC has developed a fairly comprehensive online information center designed to help answer member COVID-19 questions. The ASCC website features a tabbed webpage dedicated to COVID-19 topics, where members can access links to a wide assortment of resources collected from government and industry platforms: OSHA, WHO, CDC and others that address jobsite safety protocols, contract language interpretation, insurance topics and business recovery assistance programs. Also included on the ASCC website is a link to a similar online resource center established and maintained by ENR Magazine, a construction/engineering trade publication that includes industry news and updates related to COVID-19 issues.

ASCC members are also able to use our website to access webinars specifically geared to COVID-19. Sponsored by ASCC and prepared by attorneys (Smith Currie), economists (Sage Policy Group) and industry consultants (FMI), the webinars cover legal, economic and procedural counsel aimed at our ASCC member audience. Each webinar video runs approximately 40 minutes.

In addition to the online resources described above, we recently added a link to a newly-published document prepared by our colleagues at ASCE that provides clarity and counsel to readers seeking to recover costs associated with COVID-19 impacts. Due to copyright restrictions, ASCC cannot provide access to the document itself. We can only provide the link below to the ASCE Library where the document can be purchased in e-book (pdf) format.
Prepared by the ASCE Construction Institute Claims Avoidance and Resolution Committee, the document titled “COVID-19 Pandemic Impacts on Construction Projects” is specifically aimed at a wide audience of project stakeholders ranging from owners and engineers to contractors and suppliers. The information presented therein will be of interest and value to ASCC members and is well worth the $40.00 purchase price as described in the condensed review below.

In last month’s ASCC Voice, we discussed difficulties surrounding access to technical data and details related to failures, claims and settlements. In similar fashion, published accounts describing COVID-19 cost recovery claims and settlements has yet to go viral.

Reduced to simplest form, construction claims are handled in three stages: submittal, negotiation and settlement. It may be early yet to see accounts revealing intimate negotiation details and settlement dollar amounts. But of the few available resources we’ve seen, the ASCE publication provides perhaps the best assembly of guidelines that can be reasonably used to both establish credible COVID-19 entitlement and then prepare a submittal requesting an equitable contract price adjustment.

Since every construction contract general conditions language is unique, each must be examined for clauses related to delays and work stoppages. In cases where the contract is silent, change order or even dispute resolution provisions must then be consulted. The first chapter of the ASCE document explores in great detail multiple examples of contract interpretations of delay and work suspension impacts that may be encountered.

One of the most effective ways to establish entitlement for COVID-19 cost recovery is via presentation of a credible schedule impact analysis. In its second chapter, the ASCE document offers nine detailed schedule analysis methodologies that could be used to determine and explain schedule impacts. These examples, of course, do not only apply to COVID-19, but could also be considered by ASCC members for future schedule impact scenarios unrelated to the current pandemic.

Perhaps the greatest value to ASCC members is contained in final Chapter 3. This is where comprehensive checklists and potential cost categories are identified to ensure compensation estimates capture all possible and reasonable costs that should be considered in the request for equitable adjustment submittal. Similar to the schedule delay strategies, the checklists are not COVID-19 specific, and can be filed away to remind us of fair-game line items in future projects.

An important warning is emphasized to the reader throughout the ASCE document that can be paraphrased as follows: “In order to get paid, you must prove you were blindsided by COVID-19. And none of the above will help you if you do not submit your paperwork requesting compensation within the allowable time period stated in your contract”.

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