NEWBANKS® has served its valued clients uninterrupted through the Covid-19 pandemic, thanks to the proactive steps our staff and we have taken since March 2020. We continue to monitor the impacts of Covid-19 and remain committed to supporting your business during this tumultuous period. The health and safety of our clients, staff and the site representatives with whom we work are of the utmost importance.
Newbanks’ offices have remained open and continue to maintain the additional health and safety measures we first implemented last spring. Our staff has switched to a hybrid remote-work model to lessen disruptions and delays. Our full-time employees have reported their vaccination statuses and quarantine at home if sick or mandated. We have also reduced non-essential travel and continue to utilize all available technologies to complete our project monitoring responsibilities on your behalf.
With staff and offices across the country, we are prepared to meet our clients’ needs even in the face of travel restrictions or other localized public health regulations. We fully comply with all health and safety procedures requested during observations of occupied senior living facilities, medical office buildings and hospital projects, even if they may result in longer report turnaround times.
Unfortunately, the Covid-19 pandemic is still disrupting many industries, including construction. While production lines in Asia are returning to pre-pandemic output levels, Covid-19 outbreaks, worker quarantines and shipping container shortages have continued to slow shipments.
While we initially faced delays getting construction materials out of Southeast Asia, we now face long wait times to move products out of Oakland, Vancouver, and Los Angeles harbors. The situation does not improve on the other side of customs: Trucking has become a new issue both locally and nationally. The increased time spent at home has also driven increased consumer interest in remodeling and “DIY” work, exacerbating the heightened demand for construction materials at the exact time many suppliers cut production.
We also see additional disruptions in the supply chains for some products, components and suppliers, independent of the Covid-19 pandemic. Lumber prices have hit record highs thanks not only to Canadian tariffs but to a significant pine beetle infestation in British Columbia, a surge in new-home construction in the suburbs, and a failure among many reopening timber mills to return to pre-pandemic production levels. Similarly, severe weather in Texas has slowed the production of PVC pipes and other plastic products. In the past year, the rapid growth of e-commerce has created new demand for industrial buildings, driving up the price of steel products.
These issues can cause both substantial construction delays and project cost overruns. We continue to aggressively monitor and report potential supply issues and delays for our clients. We also continue to challenge builder teams to stay vigilant for new, unexpected issues. The potential for delays is variable based on the stage of construction and buyout of each project. No project is safe from potential delays and further price escalations are anticipated. Even with deposits placed for the manufacture of goods, those goods are still subject to fabrication and shipping delays.
Beginning last spring, many contractors began purchasing and storing some materials and custom finished goods far earlier than usual, anticipating scarcity during the pandemic. We are now also seeing contractors buy and warehouse gypsum wallboard, fiberglass batt and other traditional “off-the-shelf” products far before construction. In response, we have developed procedures and reporting tools to verify the status of these items and ensure they are adequately secured and collateralized.
We also monitor and alert our clients to delays in activating new electric and natural gas services as engineering departments work from home and crews are socially distanced. Some of the items impacted by pricing and availability at this point include:
- Dimensional lumber and products such as trusses
- Sheet material such as plywood, OSB and underlayment
- Steel – hot and cold rolled
- Fiberglass batt and Rockwool insulation
- Shingles – when available, color selections have been dropped.
- PVC pipe
- Tubs and showers – fiberglass and acrylic
- Copper wire
- Imported stone
While the Covid-19 pandemic was unforeseeable, the party that bears the risk and loss for resulting construction delays is dictated by the controlling written agreement for each development. We caution that, at this point, there is still too little case law to help guide the courts in making decisions. The force majeure clause must be examined to determine if a virus outbreak constitutes an excusable delay extending the completion date and excusing the contractor from liability for any applicable liquidated or actual damages. Any provisions governing the contractor’s ability to seek compensation for excusable delays may also come into play. These clauses will be noted in our upcoming Document and Cost Reviews as well as ongoing construction projects.
We appreciate your trust in our firm and the opportunity to assist you with your construction consulting needs since 1961. We look forward to protecting your interests through this tumultuous period and the years to come. If you have any questions or concerns regarding the status of your projects or upcoming service needs, please get in touch with your NEWBANKS® representative.