How the Pandemic Pushed the Construction Industry Five Years Into the Future

Alexandra McManus and Hussein Cholkamy | Construction Executive

On any given day, there are a multitude of variables playing out on construction jobsites, from maintaining daily logs to track hundreds of workers to creating daily schedules to keep projects on track. What made an industry that’s arguably about 20 years in the past get a dramatic technology boost five years into the future? A global pandemic that nobody saw coming. 

When COVID-19 made its first appearance on construction sites in early 2020, the domino effect of project shutdowns and labor shortages created uncertainty along with budget and timeline nightmares. The pandemic shook up the industry, with many projects coming to a screeching halt. As general contractors scrambled to keep their projects moving and workers safe, technology proved to be the solution. 

With jobsites shutting down, coupled with a nationwide labor shortage, real-time visibility over workforce variables, such as who was on-site, where they were and who they interacted with was more important than ever. Safe proximity tracking, virtual density and access control technologies helped construction companies gain more control, visibility and the ability to deal with the ever-changing regulations due to the global pandemic. More importantly, it helped keep their valuable workforce safe. 

TECHNOLOGY JUST MAKES SENSE 

On a busy jobsite with hundreds of people coming and going every day, technology became the friend general contractors could trust in times of uncertainty. Contractors began to rely more on virtual meetings, chat sessions and texts and text reporting of issues. Many experimented with wearables for workforce tracking. 

The focus on safety went beyond tool safety and OSHA’s fatal four to focus on worker health and who they may have come into contact with and where. This level of workforce visibility provided a better understanding of what was happening on a jobsite and enabled more accurate safety reporting. 

Projects with tracking technologies in place, such as hospitals and data centers, were able to resume construction because of their ability to quickly adapt to uncertain COVID-19 restrictions. 

Contractors using safe proximity tracking and access control solutions could manage daily logs and compliance digitally. As projects that were delayed due to the pandemic resume, there will be an extremely busy summer construction season. Tracking labor efficiency and safety concerns will be crucial to operate efficiently and react to emergencies. 

BETTER PREPARED FOR WHAT’S NEXT 

Since the pandemic, the construction industry is better prepared to develop response plans to a crisis. However, the pandemic has exposed weaknesses. Expect to see hybrid forms of construction and manufacturing where repeatable volumetric solutions become the norm. As schedule pressures increase against a constricted labor market, modularization is gaining popularity. 

Companies across the globe increased their adoption new tech solutions and rolled out new processes due to the availability of software, robotics, digitization and wearables. As the construction industry adjusts to the new normal, its future depends on what construction companies and their teams do next. The domino effect of projects that shut down in 2020 resuming work in addition to new projects means contractors will have to manage workers, keep them safe and avoid labor shortages. The adoption and acceptance of technology will help. As technologies continue to evolve, new solutions will become available to help the construction industry keep building more efficiently, safer and smarter lightyears into the future. 

TIMELINE OF COVID-19 CASES ON CONSTRUCTION JOBSITES

Throughout 2020, many cases of COVID-19 were reported on construction sites across the U.S. Many of which resulted in shut downs of job sites for cleaning and testing. Some of the most notable reports included: 

April 2020 
At least two clusters of COVID-19 cases involving seven workers were reported at the Kansas City Donnelly College construction site, which had to be completely shut down for disinfecting after each outbreak. 

May 2020 
38 workers on a Charlotte, North Carolina apartment tower construction site tested positive for COVID-19. The entire project was temporarily shut down for deep cleaning and sterilization of the site. 

A COVID-19 outbreak at the Denver International Airport jobsite affected 14 workers from an insulation company. The entire site was closed for several days to clean and disinfect. 

At the $106 million renovation of the University of Alabama’s football stadium in Tuscaloosa, workers tested positive for COVID-19 including the general contractor. The project was shut down for cleaning and testing before workers could return. 

31 workers on the $2 billion NFL stadium site in Las Vegas tested positive for COVID-19. The infections were linked back to local electricians working on the site. 

June 2020

A $200 million Appalachian State University project had 36 subcontractors test positive for COVID-19. 

The Mercedes-Benz Superdome in New Orleans was undergoing a four-year, $450 million facelift. The general contractor had to send 32 of the projects’ 275 daily workers home after they tested positive for COVID-19. 

Construction at the Texas A&M College campus was shut down for four days for disinfection after a COVID-19 outbreak among 55 workers and subcontractors. 

July 2020

At the $4.1 billion Salt Lake City International Airport construction site, 75 workers tested positive for COVID-19

October 2020

One indoor pre-construction meeting for a healthcare project in Portland, Oregon led to an outbreak among 13 employees. 

Builders Beware: The Implied Warranty of Workmanship and Habitability Is Set in Stone

Andrew Alvarado and Todd Baxter | Dickinson Wright

To protect homebuyers, Arizona law provides for certain warranties to be included in every contract. The most significant of those warranties, the implied warranty of workmanship and habitability, requires builders to construct homes following industry standards to ensure they are free from defects and fit for habitation. 

The practical effect of that “implied” warranty is that even if it is not included in the parties’ contract, Arizona courts will insert it and hold the builder responsible for complience. A builder cannot avoid that warranty by simply leaving it out of the contract. 

Instead of leaving the warranty out of the contract altogether (which would not affect the “implied” warranties), some builders seek to limit their liability and obligations to buyers by negotiating for specific express warranties in the contract and disclaiming and waiving all other warranties. One of the primary arguments in support of that practice is that both parties benefit from that bargain: the buyer receives the protection of the express warranty, and the builder limits its liability. That practice may make sense in theory, but given the reality that buyers are typically less sophisticated and far less knowledgeable about construction practices than builders are, is it fair?

The Arizona Court of Appeals recently answered that question with a resounding “no,” holding that the implied warranty of workmanship and habitability cannot be waived even if the parties agree to do so in writing.

In Zambrano v. M & RC II, LLC, 49 Arizona Cases Digest 21, the home purchase agreement contained the following provision:

THE HOME BUILDER’S LIMITED WARRANTY REFERENCED ABOVE IS THE ONLY WARRANTY APPLICABLE TO THE PURCHASE OF THE PROPERTY. ALL OTHER EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, HABITABILITY AND WORKMANSHIP ARE HEREBY DISCLAIMED BY SELLER AND ITS AFFILIATES AND WAIVED BY BUYER, ANY IMPLIED WARRANTY THAT MAY EXIST DE[S]PITE THE ABOVE DISCLAIMER IS HERE-BY LIMITED.

The homebuyer not only signed the purchase agreement but also initialed that specific provision.

The express warranty also contained the following disclaimer:

WE make no housing merchant implied warranty of habitability or any other warranties, express or implied, in connection with the sales contract or the warrantied HOME, and all such warranties are excluded, except as expressly provided in this BUILDER’S LIMITED WARRANTY. There are no warranties which extend beyond the face of this BUILDER’S LIMITED WARRANTY.

The buyer subsequently sued the builder, alleging that because there were certain construction defects in the home, the builder had breached the implied warranty of workmanship and habitability. However, the builder argued that since the buyer had waived the implied warranty, it could not be held liable, and the buyer’s claim was dismissed.

The Arizona Court of Appeals disagreed and explained that although there is strong public policy in favor of allowing parties to freely contract, there is an even stronger policy in favor of protecting homebuyers in this state.

The Zambrano court established that “a new home buyer cannot waive – and a builder cannot disclaim – the implied warranty of workmanship and habitability. This prohibition precludes a waiver even when, as here, the builder gives an express warranty in consideration for the waiver.”

While other states still allow builders to provide for an express warranty in lieu of the implied warranties (and allow buyers to waive the same), Arizona law no longer allows that practice – the implied warranty of workmanship and habitability is set in stone. Accordingly, builders in Arizona should understand that those provisions in their current contracts are not enforceable and should remove them from their contracts moving forward.

Back to (Construction) Work after COVID

Meredith Freeman | Shutts & Bowen

As the nation begins the slow road to recovery following COVID-19 and initiates a return to the workplace, the construction industry – which has proven to be one of the most resilient industries throughout the pandemic – will continue to build momentum and evolve from the lessons learned over the last year.

At the onset of the pandemic, the construction industry and construction workers were quickly deemed ‘essential’ and were largely uninterrupted by lock down and mandatory stay-at-home orders. However, the COVID-19 crisis hit labor-intensive sectors of the construction industry quickly, with outbreaks seriously impacting productivity and presenting a health and safety risk to work crews. These threats to the safety of workers and overall project integrity were further escalated by other problems, including the delay or cancellation of projects, as well as global disruption to the supply chain and massive material shortages. In some ways, construction never stopped, however, the impact from such unprecedented challenges has rippled across the industry.

Low interest rates and dwindling supply in the single-family home market sent demand for new construction through the roof. Amid the ongoing housing boom and subsequent uptick in construction, the industry is plagued with material shortages, price spikes and increased lead times. Proactive companies are finding creative solutions to deal with these issues, seeking to reconnect with people who can help their businesses thrive in a post-COVID economy.

New market dynamics in the post-pandemic environment point to several trends in the construction sector, including:

  • An initial decline in retail/restaurant construction;
  • An increase in warehouse demand;
  • An increase in public construction projects;
  • A mass residential exodus of people from metropolitan areas; and,
  • An increase in companies relocating to new geographies.

As momentum continues to build in the industry, construction companies have engaged in new strategies and operating procedures to rally for long-term success. They have increased their focus on stabilizing and managing supply chains, the adoption of new technologies and efficiencies, off-site and modular construction, cybersecurity measures, adaptive reuse and refurbishment projects for existing structures, as well as implementing pandemic-specific contract clauses to mitigate potential damages. Importantly, proactive construction companies are protecting themselves through legal means to circumvent the unavoidable delays caused by COVID-19’s ripple effects. Key contract terms addressing entitlement to schedule relief, spikes in material costs, contract performance obligations and delay clauses, suspension of work and termination for convenience clauses, among other provisions, allow construction businesses to operate safely in the still volatile marketplace and guard against inflation, long-lead times and continued disruptions in the supply chain.

Most importantly, people in the construction industry are reconnecting and reaffirming the professional relationships that made them successful before the pandemic, including clients, prior joint venture partners, other industry players (i.e. subcontractors, engineers, architects, general contractors, suppliers) and attorneys. These relationships can be critical to supporting existing revenue streams, expanding into new market sectors, and navigating new challenges.  Now is the time to reconnect with these key relationships. 

Maintenance Best Practices and Investigations

John Davidson | Nexsen Pruet

The recent collapse of the Champlain Towers building is an unimaginable tragedy and likely the quintessential worst nightmare for all involved in the construction industry. Over time, there likely will be questions about the design, construction, and maintenance of the building. This article is not intended to address anything related to this tragedy. However, it is a good time for a reminder of the importance of building maintenance. 

I think everyone would agree that buildings must be maintained – whether it is your house or the largest commercial or industrial building. But what does maintenance require? Most building owners are not in the business of maintaining buildings, so how do they know what to do? The best place to find that answer starts with the designers and builders themselves. Typically, the industry-standard construction contracts contain provisions requiring that the builder and subcontractors provide all warranty documents and operations and maintenance manuals for the building’s systems and major equipment. Maintenance is also typically addressed more specifically in the specifications included in the contract documents. Using these maintenance manuals and related information as a start, owners then can plan and budget for the periodic maintenance activities of the buildings. For owners with a building service or maintenance staff, many of these activities may be handled in-house. For other owners without a dedicated staff, there are many outside services that can handle the maintenance. However, there may not be a one-stop-shop for all maintenance activities. Instead, the owner may need to assemble a team of several vendors to perform periodic maintenance of each building system. Along with ensuring that periodic maintenance is performed, owners should keep records of the maintenance performed, by whom, when, and what was done. 

If your construction contract does not address these issues, you should consider what information would be helpful in planning for maintenance and including that in future contracts. Having that understanding early on can be helpful for all involved from designers to the owner. 

Besides maintenance, what should owners do when unexpected and maybe atypical problems or failures arise? Owners should engage the services of a competent professional in the specific trade to investigate the issue. Ideally, the investigation should evaluate the extent of the problem, the cause of the problem, potential remedies for the problem, the cost of the potential remedies, the urgency of the problem, and likely outcomes if the problem is not remedied. This information should allow the owner to make an informed decision on how to address the problem. 

What if the investigation suggests that the issue is a failure in the construction or design of the building? At that point, the owner needs legal help to navigate the process and evaluate potential avenues to address the problem, be it litigation or not. Owners should bear in mind that most states have both statutes of limitations and states of repose that restrict the time beyond which construction claims are time-barred. In both South Carolina and North Carolina, the statute of limitations for construction claims is 3 years, although it may not be clear when the statute begins to run. The two states differ as to the statutes of repose, however. North Carolina’s statute of repose requires actions to be commenced within 6 years of the substantial completion of the project. In South Carolina, the statute of repose is 8 years. But again, it is not always clear when the statute begins to run. There are many things to consider in deciding how to address a potential construction claim or lawsuit. Our lawyers are ready and able to assist.

OSHA Standard Changes That Will Impact Construction

Courtney Malveaux | Jackson Lewis

The U.S. Department of Labor’s (DOL) regulatory agenda for spring 2021 lists regulations the agency will focus on for the next six months, including 26 Occupational Safety and Health Administration (OSHA) regulations, six of which are in the final rule stage and the rest are in the proposed or pre-rule stage. Many of them will directly affect the construction industry.

Heat Illness Prevention

Perhaps the most consequential for the construction industry will be the standard for Heat Illness Prevention in Outdoor and Indoor Work Settings.

Heat is the number one weather-related killer and the problem has become more dangerous in recent years as global temperatures have continued to rise. Construction workers especially are at high risk, often working outside and performing exerting tasks.

Historically, OSHA has used the Occupational Safety and Health Act’s General Duty Clause, a “catch-all” for recognized hazards not addressed by a specific standard, to cite employers. That will change. If OSHA follows state standards already in place, it could mandate break times and require employers to monitor employee acclimatization, as well as outdoor temperatures and humidity levels.

Communication Tower Safety

A proposed Communication Tower Safety standard is under consideration. As technology evolves, the need for communication towers continues to grow, which likely will cause an increase in tower construction and maintenance projects in the next few years. However, these projects have had a fatality rate that has greatly exceeded that of the rest of the construction industry over the past 20 years. This standard will aim to dramatically decrease that rate as more workers enter the industry.

Enhanced Workplace Injury and Illness Tracking

Enhanced Workplace Injury and Illness Tracking is on the way. As expected under the Biden Administration, OSHA has proposed to revert to the 2016 version of the rule following a change under the previous administration in 2018. That proposed regulation includes anti-retaliation provisions that may discourage workplace safety and health incentive programs and post-incident drug testing.

If this reversion occurs, it likely signals that OSHA will view drug testing and incentive programs as a form of employer retaliation. Proposed changes would require establishments with at least 250 employees to provide electronic submissions of injury and illness data with Forms 300 and 301, in addition to the less detailed summary data currently required in Form 300A.

This could have a particular impact on larger construction sites that report more injuries and illnesses because of the sheer number of employees working at a site. It also may have an outsized impact as construction employers grapple with marijuana legalization laws and worker intoxication. Those employed in construction are almost twice as likely to have a substance abuse disorder than the general population. Construction workers also are the most likely to use opioids and cocaine of any profession and 12 percent of them have an alcohol use disorder. Reasons for these statistics may include long workdays, physical pain from labor, and stress. Regardless of the cause, substance and alcohol abuse lead to more workplace accidents and injuries. Dehydration from alcoholism also can lead to several different heat illnesses. If substance abuse trends do not change, the new regulations may end up having employers defending more citations, in addition to other legal headaches.

Hazardous Material

Hazardous Material standards addressing blood lead levels and crystalline silica is in the works. Construction workers encounter these hazards with great frequency, especially those who work with concrete, stone, and metals.

Personal Protective Equipment

OSHA is addressing Personal Protective Equipment (PPE) in Construction, although it is unclear how it will do so. A PPE standard could have an outsized impact for construction sites, especially if it addresses COVID-19 exposures for construction workers in close quarters. It also could affect the distribution of PPE normally used in the industry.

Cranes and Derricks

Amendments to the Cranes and Derricks in Construction Standard are on the table. Amendments likely will not change the application of the standard significantly, but they should help clarify and correct mistakes.

Welding and Cutting

OSHA plans to amend Welding and Cutting standards to remove ambiguity about the “confined space” definition. The original rule uses the term but failed to define it. A new definition could have an impact on many construction sites depending on the phrasing.

Other Regulations

Other regulations on the agenda that may have an impact include Shipyard Fall Protection—Scaffolds, Ladders and Other Working Surfaces, a Mechanical Power Presses update, and Walking-Working Surfaces.