New York State Governor Andrew Cuomo recently announced phased reopening of businesses, with the construction industry included in Phase 1. The Governor’s announcement means project owners in New York should prepare for construction to restart. Given the long pause of most projects in New York, contractors and subcontractors will first report to their most profitable projects where payments are made timely. We recommend that owners consider taking the following steps before the construction ban is lifted to successfully restart their projects.
Remobilizing The Construction Team
The key to an owner successfully resuming its project is incentivizing the contractor to prioritize the project. We recommend owners take the following steps:
- Remobilization Plan – Review and discuss the contractor’s remobilization plan, schedule and costs. Owners should consider depositing sums in escrow or confirming availability of funds with their lender to have trades/subcontractors paid promptly and be ready to pay reasonable remobilization costs before the construction ban is lifted.
- COVID-19 Compliance – Confirm the contractor has prepared a COVID-19 safety protocol that complies with New York State’s Interim Guidance for Construction Activities, the New York City Department of Buildings’ Safety Guidance and the applicable federal requirements of the Occupational Safety and Health Administration, the Americans with Disabilities Act, the Center for Disease Control and Prevention and the Environmental Protection Agency. No construction activity can occur without meeting minimum safety standards and it is essential that a compliant protocol is in place before construction restarts.
- Outstanding Payments and Deposits – Confirm that all requisitions have been paid, including payments to subcontractors and vendors.
- Re-Scheduling – The contractor should submit a revised and detailed critical path method (CPM) schedule that accounts for possible out of sequence work to maximize efficiency.
- Requalifying Subcontractors – The COVID-19 crisis may have significantly impacted subcontractors. Requalifying subcontractors will limit the risk of resuming the project with subcontractors who are unable to perform.
- Materials, Custom Materials and Millwork – Production and delivery of custom materials may have been delayed and requesting an inventory of all materials, including any custom materials and millwork, will allow owners to evaluate the impact of such delays.
- Inspecting the Project and Builder’s Risk Insurance – Owners should perform a comprehensive inspection of the project with the contractor and immediately put their builder’s risk insurance carrier on notice of any physical damage.
- Claims – Resolving any delay claims or notices of potential claims made by the contractor will be beneficial, as such issues will likely arise later in the project.
Communicate With The Construction Team
Seamlessly restarting construction will require coordinating with the construction team. Owners should take detailed meeting minutes to create a record of what was discussed and agreed upon. Owners should regularly communicate with:
- Contractor – Maintaining the project manager and project supervisors will ensure project continuity and simplify restarting construction.
- Owner’s Representative – It is critical that the owner's representative is familiar with the issues associated with restarting construction and in regular communication with the construction team.
- Design Professionals – Owners’ design professionals should be ready to coordinate construction review and should submit any outstanding plans during the construction ban.
Review Relevant Documents
Reviewing owners’ contractual rights will be critical to resuming the project without additional delays. Owners should review:
- Contractor Agreement – Understanding the parties’ rights with respect to delays, costs and notice requirements will put owners in the best position to navigate any COVID-19 related-claims.
- Insurance Policies – Owners should have their insurance broker review all project policies to confirm timely renewal and to determine if there is a potential business interruption claim.
- Permits – Confirm that all necessary permits have been renewed so that construction can restart when the ban is lifted.
- Construction Plans – Review, finalize and file any necessary construction plans during the construction ban, as the Department of Buildings will likely be overwhelmed with filings and COVID-19 compliance once construction resumes.
The above is an overview of steps owners should consider to efficiently restart their projects once the construction ban is lifted.