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COVID-19 Impact on Construction Projects

COVID-19 Impact on Construction Projects

Cotton & Company understands the COVID-19 pandemic has caused a lot of uncertainty in the construction industry. Nearly every construction project (whether ongoing or in the procurement phase) has been impacted by COVID-19 in various ways including:

  • Suspension. State and local government restrictions have forced some projects to be suspended. Where construction is authorized, some projects have been suspended by the owner, contractor, or subcontractor due to safety concerns or other COVID-19 impacts, such as availability of funds, labor, and materials.
  • Termination. As a result of impacts from COVID-19 some projects may be terminated by the owner if the project is no longer feasible or economically viable. Additionally, in some instances, the contractor or subcontractor may terminate the contract if the work is suspended for an extended period of time.  
  • Delay and Disruption. Projects that are able to proceed may encounter delays and disruption associated with implementing social distancing guidelines and additional safety measures. The availability of material, supplies, and an adequate workforce along with delays getting inspections, permits, or reliance on other 3rd parties may also result in delays, disruption, and lost productivity on the project. 

Things to consider when your project has increased costs due to COVID-19:

Contract Terms and Conditions. We can assist with preparing and evaluating damages stemming from the COVID-19 impacts identified above and applying the terms and conditions of individual contracts and subcontracts to those damages to ensure claims include all impacts, as well as include claims for eligible impacts. 

Project Documentation. Project documentation is always important, but in these uncertain times, it is critical to do your best to identify those additional costs incurred and document efforts to accumulate and segregate them from base project costs. You can rely on our extensive experience in the construction industry to help identify and implement cost effective internal controls that would enable Owners, Contractors and Subcontractors, to properly accumulate and segregate costs incurred due to COVID-19 impacts.

Mitigation Efforts. Working with all parties involved and documenting efforts to mitigate costs, such as redeploying or adjusting project workforce, equipment, and materials and utilizing relief programs to help control the project costs, which may be necessary to recover damages. Cotton & Company is available to assist Owners, Contractors and Subcontractors to quantify costs related to mitigation efforts implemented during the crisis and any acceleration efforts required complete projects on schedule.

Damages Quantification. Cotton & Company has extensive experience in assisting Owners, Contractors and Subcontractors negotiate change orders and prepare and evaluate claims. Cotton & Company is able to leverage our experience of typical construction events such as delays, suspensions, terminations, productivity, unforeseen conditions, and alleged breaches to assist Owners Contractors and Subcontractors, quantify damages resulting from COVID-19. We have extensive experience preparing and evaluating several claim methodologies such as the Eichleay Formula, Measured Mile, Total Cost Claims, Lost Profits, and Subcontractor Pass-through claims to quantify increased project costs, field office overhead, home office overhead, and lost profits.

Cotton & Company is actively monitoring the latest developments to support Owners, Contractors or Subcontractors related to COVID-19 impacts. But, ultimately, for a contractor to be successful, it must adequately support its claim and ensue that the claim elements and claim methodology align with the terms and conditions of the contract.

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