Ongoing Impacts of the Coronavirus Pandemic on Construction Projects in Major Markets
As we began to describe on March 18, the economic impacts of the ongoing coronavirus/COVID-19 pandemic on the construction industry are becoming more severe as the pandemic continues on and spreads. Substantial uncertainty remains, however – as of the date of this post, the “peak” of the pandemic in New York, Connecticut, and Massachusetts is expected to occur (depending on which reports you read) in mid-April, late-April or May, respectively. It appears increasingly likely that proactive, protective measures in these states, along with their restrictive effects on the economy and construction activity, will continue through the end of April and into May.
More forceful stop-work orders in major markets like New York and Boston, along with narrower definitions of “essential construction” have led to fewer projects being permitted to continue on-site operations. In New York, as of March 27, all “non-essential construction” except “emergency construction” is shut down, as we covered previously. These restrictions are currently expected to last until 11:59 p.m. on April 29, 2020, unless later extended by a future Executive Order.
In Massachusetts, thus far certain construction activities have been exempted from the statewide shutdown of “nonessential” businesses through at least May 4, although local construction moratoriums exist in places such as Boston, Cambridge and Somerville. Except to the extent that they may be prohibited by local orders, many categories of construction professionals are deemed to be providing “essential services” as of the latest list issued by the Governor’s office on March 31, 2020. These construction professionals include, among others, “plumbers, electricians, exterminators, builders, contractors, HVAC Technicians, landscapers, inspectors and other service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of residences, businesses and buildings such as hospitals, health care facilities, senior living facilities, and any temporary construction required to support COVID-19 response.”
Luckily, even in localities where non-exempt on-site construction activities have been prohibited, most construction projects have not ground to a total halt. Although many public and private owners are ordering suspensions of on-site work in accordance with these restrictions, or of their own accord, on many projects off-site activities are proceeding to the extent possible, including design and engineering work, preconstruction services such as budgeting, the preparation of bid packages, scheduling adjustments, and the procurement of materials or furniture, fixtures and equipment.
Many construction project participants are working tirelessly to determine which of these types of off-site activities can continue under the current circumstances in order to keep projects moving, keep revenue coming in, and keep their workers employed. Although negative economic impacts from the pandemic now seem unavoidable, those who are able to continue certain aspects of their projects while remaining in compliance with governmental restrictions and effective healthy and safety precautions, should be best positioned to hit the ground running when the industry inevitably returns to “business as usual.” We will provide additional updates as changes to these restrictions and their ultimate durations become more clear.