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How coronavirus (covid-19) could impact your construction project

26/2/2020

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Image by Gerd Altmann from Pixabay
​Whole regions are being quarantined to prevent the spread of coronavirus (now called covid-19). Thankfully for most of the World so far these areas are mainly in China, with pockets in Italy, South Korea and a few other countries.
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Obviously for many there’s no reason to panic and the virus seems a long way from most of us. But, no matter where you are in the world your construction project could still feel the ripple impacts of coronavirus. 

How coronavirus could impact your construction project

  1. Shortage of materials and equipment. We live in a global economy and many products used on construction projects are manufactured in China or South Korea. Even items manufactured elsewhere could incorporate parts from these two countries. Items impacted can be simple products like nails and screws, but they could also include many electronic components. Some items on your project could also come from Italy, these could include ceramic and marble tiles and some equipment. Inevitably there will be shortages of some construction items and prices could rise for items which have to be sourced elsewhere.
  2. Clients invested in affected regions, or relying on revenue in these areas, could suffer cash flow problems, and even lose money. If your client is exposed to the impacts of coronavirus this could impact your payments. Is your client immune from the impacts of coronavirus?
  3. Many businesses are becoming more averse to taking on extra risk and starting new construction projects when the full impacts of coronavirus on their business are still unknown. This will delay the start of new construction projects. Projects already running may be slowed or trimmed to reduce the impacts of the project on the rest of the business.
  4. General panic among workers. This could result in people refusing to work with workers of Asian background, or even possibly not working with someone displaying flue like symptoms. This will disrupt work.
  5. Workers travelling to affected regions, or who have travelled with people with the virus, could be quarantined for two weeks or more, which will impact production.

What you can do to protect your construction project

  1. Understand where products incorporated in your project are coming from. Ensure you have sufficient stock. Track the items if they’re coming from regions impacted by the virus and ensure they’re dispatched on schedule. If necessary look at procuring these items elsewhere. Always maintain sufficient stock of materials on your project.
  2. Read you contract and know if you can claim for delays caused by the unavailability of construction materials and equipment due to the impacts of the virus. Most contracts will say that the coronavirus outbreak is a Force Majeure event, which usually means the contractor can claim for the time lost due to the delay, but not the associated costs. So you’re not going to be recompensed for the costs associated with the delay which will hurt your company. In some cases, where you’ve elected to purchase items from coronavirus hotspots while the item was readily available closer to home could mean that you can’t claim an extension of time for delayed deliveries.
  3. Ordering materials from areas currently under quarantine or impacted by the virus, where you should have been aware of the restrictions, could leave you little recourse to claim for a delay caused by the virus if the items aren’t delivered in time. So it’s important to diligently research your construction products' origins before you place an order.
  4. Warn your client as soon as you know there could be a delay caused by materials being unavailable. They can take alternative steps to mitigate the impacts of the delay, and even specify different products.
  5. Understand your client and their business exposure to the virus. Are your payments secure?
  6. Display posters and conduct info sessions with employees on the symptoms of coronavirus and how best to avoid catching it. Avoid hysteria and panic.
  7. Encourage good hygiene and see that there are sufficient hand washing stations on the project. For further information on getting your workplace ready for the virus read this advice from the World Health Organisation.
  8. People with flu-like symptoms should be sent home and encouraged to see a doctor.
  9. Encourage employees to have flu vaccinations. This won’t protect against coronavirus but will prevent other flu’s which could weaken immune systems making employees more susceptible to catching the virus. Anyway, workers suffering from regular flu could cause panic amongst other employees who may automatically assume it must be coronavirus.
  10. Check new project contracts before signing them to ensure that you are protected should the coronavirus impact the project.

If the virus spreads to your area

​Keep an accurate list of people working on the project and entering the project. This should have contact details in the event that someone is taken ill with the virus on your project, so that people who have been in contact with the ill person can be contacted.
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If your region is directly impacted by the virus there will be transport disruptions. Workers may be prevented from coming to work. Have a plan in place to secure and shut down the project so that it’s safe. Work could be disrupted for several weeks.

​Keep your client informed and discuss closure of the project with them should this be necessary. 

Conclusion - control the impacts on your project

Coronavirus may have only a small impact on your construction project. However, it’s important to be prepared and understand your supply chains and how your project could be impacted.

For the present avoid undertaking projects in areas at risk of the virus. Avoid travelling to risk areas.
​
Hopefully the outbreak of coronavirus or covid-19 will quickly pass into the medical history books, as did SARS and swine flu.

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Do you want to learn how to manage construction projects successfully?

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​Paul Netscher has written several easy to read books for owners, contractors, construction managers, construction supervisors and foremen. They cover all aspects of construction management and are filled with tips and insights.
The books are available in paper and ebook from most online stores including Amazon.

Need help with your construction project or construction company?

​Contact Paul Netscher for help and advice.
To read more about the author’s books and find out where you can purchase them visit the pages on this website by clicking the links below:
  • '​Successful Construction Project Management: The Practical Guide'
  • 'Building a Successful Construction Company: The Practical Guide'
  • 'Construction Claims: A Short Guide for Contractors'
  • 'Construction Project Management: Tips and Insights'
  • ​'Construction Management: From Project Concept to Completion'
  • 'The Successful Construction Supervisor and Foreman'
  • and 'An Introduction to Building and Renovating Houses - Volumes 1 and 2'
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© 2020 This article is not to be reproduced for commercial purposes without written permission from the author.
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Why do large construction projects go over budget

25/2/2020

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Ever wondered why government construction projects always exceed budget

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Ever wondered why government construction projects always exceed budget? Well read this interesting article in the CEO Magazine: Why politicians lie about the cost of rail projects

Want to know more about planning projects?

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Paul Netscher has written an easy practical guide for owners/clients and project managers. 'Construction Management From Project Concept to Completion' is available in ebook and paper from Amazon and other online bookstores. This book is a valuable guide to all those planning a new project

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Costs to Include in Your Construction Variation Claim

20/2/2020

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Image courtesy of xedos4 at FreeDigitalPhotos.net
Almost every construction project has changes, delays and extra work and invariably contractors incur additional costs. Many of these costs can be claimed back from clients when the contractor submits a variation claim. It should be straight forward, there was a change and the contractor should be paid their additional costs. But, as we’ve previously discussed the contractor must substantiate the reason for the variation claim as well as the costs.

Will you get the money you claimed in your variation claim?

​Regrettably, many construction variation claims are poorly put together and clients reject the contractor’s claims.

But, even when the client approves the claim there’s no guarantee that all of the contractor’s costs will be reimbursed. In fact, compounding the problem is that contractors often don’t claim all of the costs they incurred because of a variation event – costs which they’re entitled to claim. This may seem hard to believe, after all who would work for free, or not claim legitimate costs?

But, it regularly happens because contractors forget some costs, they don’t keep accurate records, or they don’t fully appreciate the full impacts of the variation on their work, including the wider impacts of the variation on work not seen as being directly impacted by the event.

Of course, there are also some contractors who become gung-ho when they see a variation claim. They think they can add everything and anything to increase the value of their variation claim. In their excitement of adding inflated and fictitious costs they often overlook legitimate costs.
​
Naturally, most clients are generally wise to contractor’s ways, and any costs and delays which can’t be substantiated will be rejected and the contractor will face disappointment when they only receive a fraction of what they tried to claim from the client. In the process, they’ve also damaged their reputation as clients generally don’t like to be taken advantage of. Unfortunately, in this process, the contractor may have lost the opportunity to claim the legitimate costs that they overlooked in their rush to fabricate costs.

​Costs you should add in your construction variation claim

It’s vital to understand the full impacts of the variation, which could include disruption to the construction work and reduced productivity of both people and construction equipment. Then there’re impacts on other project work, which could include blocking access, taking construction resources from these activities, discontinuity of work, underutilisation of resources, and interference with the work.

​Costs to consider include:
​
1. Labour costs
Including base wages, overtime costs, allowances, personal protective gear, and transport and accommodation of workers where this is supplied by the contractor.
2. Equipment costs
Including the hire costs, the wages of the operator, fuel, lubricants, insurance, spares, and services where necessary.
4. Mobilisation costs for equipment and people
Of course, don’t forget that items brought to the project for the additional work must be demobilised after they are no longer required.
5. Material costs
Including transport, offloading, wastage, testing, a design where necessary, and all adhesives and fixings.
6. Supervision costs
Including salary, transport, accommodation, computers, etc.
7. Access equipment and cranes
Either additional equipment or the equipment is required longer on the construction project than planned
8. Off-site costs
Such as project personnel working from the head office.
9. Project overheads
Such as office hire, insurances, bonds, security, site facilities, etc.
10. Subcontractor’s costs
Check that they've provided all their actual costs. You don't want them to submit a further claim after you've lodged your claim with your client. Of course don't forget your costs where you've had to provide things to the subcontractor - say transport, cranes, access scaffold, transport, etc.
11. Demolished materials cost
Where demolitions are involved, then the cost to load and cart the demolished materials from the site, costs to deal with hazardous products, dump fees, temporary supports, and bracing, etc.
12. Design cost
Where required, design fees.
13. Profits and overheads on the above
14. Protection of existing and completed work to enable the additional work to be carried out.

​Of course, the client can request a breakdown of these costs, so they should be provable. Often projects involve multiple variation claims and it’s important that contractors are consistent and use the same base cost for items on the variation claims. For instance, it will appear suspicious if the contractor uses $15 an hour for a labourer on one claim and $16.50 in another claim.
....Continue Reading....
This article was first published on the ClockShark website. To visit this website and continue reading the article click on the link above.
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Do you want to learn more about construction claims?

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Paul Netscher has written several easy to read books for owners, contractors, construction managers, construction supervisors and foremen. They cover all aspects of construction management and are filled with tips and insights.

Paul's book, 'Construction Claims: A Short Guide for Contractors' is a simple guide to construction claims, giving tips on preparing claims as well as how to avoid claims.

The books are available in paper and ebook from most online stores including Amazon.
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© 2019 This article is not to be reproduced for commercial purposes without written permission from the author.

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    Copyright 2016 - The attached articles cannot be reproduced for commercial purposes without the consent of the author.
    The opinions expressed in the attached articles are those of the writer. It should be noted that projects are varied and different laws and restrictions apply which depend on the location of the contractor and the project. It's important that the reader uses the supplied information taking cognisance of their particular circumstances. The writer assumes no responsibility or liability for any loss of any kind arising from the reader using the information or advice contained herein.
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  • Construction Home
  • About Paul Netscher
  • +Construction Books
    • Successful Construction Project Management
    • Building a Successful Construction Company
    • Construction Claims
    • Construction Project Management: Tips and Insights
    • Construction Management: From Project Concept to Completion
    • An Introduction to Building and Renovating Houses
    • The Successful Construction Supervisor and Foreman
    • Designing your ideal home
  • Construction Management Services
  • Book Reviews
  • Contact
  • Blog | Construction Management
  • Site Map
  • Blog | Home Improvement
  • Index of construction articles
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