The New Year brought tremendous promise with construction spending climbing 1.8% in January, the strongest monthly rise in nearly two years. Now, due to the coronavirus pandemic, construction could be facing the headwinds of a recession. With that reality, you can expect some construction project delays, depending on the state you work in.
Homeowners may decide to put off that new kitchen renovation. Residential builders may stall for fear of not having enough buyers. Commercial projects may be put on hold if they sense weak demand, financing issues or material delivery problems caused by reliance on materials from overseas. Here are a few tips for how to handle delays during these unpredictable times.
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Review Your Contracts
With the slowdown, it’s a great time to take care of any residual administrative work like reviewing all of your contracts for clauses related to project delays. There are typically two different types of delays: excusable and non-excusable.
- Non-Excusable Delays: Occurs when a general contractor or owner does not handle or take care of elements within their control (poor scheduling, late material ordering, etc.), thus causing a delay. A subcontractor may be entitled to damages incurred, however, in most cases, contractors work together to remedy the situation.
- Excusable Delays: Allows a general contractor to delay a project due to events beyond their control, or circumstances that are not foreseeable (such as a global health pandemic).
With these clauses written into the contract, a delay due to economic disruption associated with the coronavirus is likely covered. If you’d like to learn more about these construction project delays, read this report from Billd partner, Levelset.
If possible, you might consider writing in a language that further protects you from delays that are out of your control.
Communicate Quickly and Often
Consistent and clear communication is critical during times like these. Here are some tips for how to communicate with your three primary types of contacts: workers, suppliers and clients.
- Workers: Transparency is your best policy. Explain which projects have been delayed, and why, and what pay schedules may look like for upcoming months so that they can plan. Then establish a communication system so you can provide updates as timelines change. In addition, encourage them to communicate and be transparent as well back to you.In a recent podcast from Billd, Jesse Weissburg interviewed Victor De Jesus of L&M Group USA, LLC a Tile Installation contractor in Miami, Florida. Victor has advised his staff to be honest and created a safe environment for them to be transparent. If they’re sick, or if they know someone else is sick, speak up and don’t be quiet.
- Suppliers: Talk about terms and explain your situation. More specifically, discuss how the current realities impact upcoming payment deadlines and potential delays. Chances are you’re not the first one approaching them about this issue. Ask for extended terms if a project was delayed. Be transparent. Don’t ignore the upcoming payment. If you need to cancel orders that haven’t been shipped yet, do so.
- Clients: Keep clients informed regarding CDC requirements and public health efforts that affect your project’s ability to move forward. Stay in regular contact and let them know you intend to follow through on original obligations. This is a time when tempers might get short, so remember to think long-term and do your best not to react to potentially hostile responses. However, at the end of the day, it’s important to make the best decision for your team and the client’s safety.“My advice to other business owners right now is that if you think you need to close a project, don’t think about it, just do it,” says Victor De Jesus, “Talk to the owner. You have to close it. It’s so important to be honest, and make the right decision, even when it’s hard.”When the situation resolves itself, the work will still need to be done, but more importantly, relationships will still need to be intact. Your client will more than likely understand and appreciate safety concerns.
Use Your Spare Time Wisely
Use the downtime from construction project delays to sharpen skills and tend to the business housekeeping tasks you may have been putting off such as continued education. Workers can even knock out 10 to 30 hours of OSHA training to stay on top of workplace safety issues.
It’s also a good time to assess your business costs and do some cutting, if needed. Evaluate any systems and structures you have in place and make improvements based on long-term optimization. An example of this could be organizing documentation or putting together project onboarding procedures. Good companies come out of down-cycles leaner, stronger, and ready to take advantage of future opportunities. Another example is migrating paper documentation to an electronic documentation software.
Control the Controllables
The current lay of the land is highly unpredictable, making it more important than ever to plan, get organized, and update your communication efforts. Thankfully, Billd is here to help you through these challenging times. Our payment system is specifically built for contractor material purchases. Our solution allows for more time to finish projects and collect payments, up to 120 days, which can help for delays and dealing with situations beyond your control.