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COVID-19 and Construction

AGC FIGHTS HARD FOR INDUSTRY’S INTERESTS DURING PANDEMIC

BY DEBRA WOOD

As the nation reels from the deadly novel coronavirus pandemic, with construction projects threatened, leadership at AGC of America continuously advocates for members.

A novel coronavirus, named Severe Acute Respiratory Syndrome coronavirus 2 (SARS-CoV-2), was identified as the cause of an outbreak of respiratory illness first detected in Wuhan, China in 2019. The illness caused by this virus has been named coronavirus disease 2019 (COVID-19). PHOTO COURTESY OF CDC

“We are doing everything we can to protect your interests,” says Stephen Sandherr, chief executive officer, AGC.

THE PANDEMIC DISRUPTS CONSTRUCTION

The pandemic threatens to undermine a robust construction market. AGC conducted an online study in the middle of March 2020 of 909 members, who reported the pandemic has negatively affected their businesses.

In fact, 28 percent of contractors indicated their work on current projects or those slated to start within 30 days had been halted or delayed by an owner or government official or agency due to the health emergency. Additionally, 11 percent of projects expected to start in more than 30 days from the survey were delayed or halted.

However, “the industry, so far, has been able to keep projects going better than other industries that have voluntarily shut down or were ordered to be shut down,” says Ken Simonson, chief economist at AGC, who expects more authorities to order projects be halted to practice social distancing. But “in many cases, construction is vital, and you cannot just abandon a construction site.”

Material availability also has created problems, with 22 percent of respondents reporting a supplier had said deliveries will be late or cancelled. Sixteen percent reported a shortage of materials, parts or equipment, including personal protective equipment, such as N95 masks. On March 17, federal officials asked construction firms to donate those masks to health care facilities and not to order more.

“I think we will see more and more of the supply chain glitches,” Simonson says. “As we see more shipments delayed from Italy and other places, I think this will become more of a factor for contractors trying to complete projects.”

Eighteen percent of survey respondents indicated shortages or delays in permitting, inspections, certificates of occupancy or other government actions. And 11 percent noted a shortage of craft workers and subcontractors, as people stay home in self-quarantine or to care for others.

“There are a lot of things impeding construction at this point,” Simonson says.

Longer-term impacts will likely include owners lacking confidence or the money to build again, says Simonson, who expects a slower recovery for the construction industry. However, more hospitals and screening facilities or laboratory facilities may be needed, but airports and other public agencies are seeing drops in revenues. Offices may not be needed as businesses experience the benefits of allowing employees to work from home.

“I think there will be a slower recovery for construction,” Simonson says. “And, we will see a smaller increase in commodity prices.”

AGC’S FOUR RESPONSES TO COVID-19

AGC is focusing on four responses to the pandemic, Sandherr says.

1. The organization has concentrated on working to ensure members can continue to work, including trying to keep governments from damaging members. Some governments, including Boston and the Pennsylvania Department of Transportation, have stopped construction activities.

2. AGC also continuously educates Congress and federal officials about the needs of the construction industry, and it has been successful in shaping some of the legislation. The association plans to use data from this and other surveys to help “tell our story on the Hill,” Sandherr says.Jimmy Christianson, vice president of government relations for AGC, adds that “We are finding the industries that can provide data are getting the funding that they need.”

3. AGC remains dedicated to providing members with information to keep their employees safe, their businesses open and to mitigate against future losses. AGC offers webinars (https://www.agc.org/coronavirus-covid-19) and a COVID-19 website (https://www.agc.org/coronavirus).

4. Another concern for contractors is contracts, which may protect firms from losses related to COVID-19, a force majeure event. Brian Perlberg, senior counsel, construction law and contracts for AGC, says, contractors will need to give prompt notice in writing and prove the pandemic was not contemplated and caused the delay. The contract may provide for additional time. ConsensusDocs includes provisions for epidemics and adverse government actions. AGC has drafted a sample letter.

LEGISLATION AND REGULATION AFFECTING MEMBERS

Legislation passed in Congress in response to the outbreak will affect construction firms. AGC has made improvements in some of the law making.

“It has been around the clock trying to make sure our industry is involved in whatever is going on,” Christianson says.

Christianson thanks the more than 27,000 members who took the time to send messages to their members of Congress.

“It made a difference and got these members of Congress talking to us,” Christianson says. “We’re asking you to continue to contact the members of Congress [when AGC sends] action alerts, so they know where you stand.”

In addition to new legislation, the Occupational Safety and Health Administration (OSHA) has issued regulations for reporting and recording workplace exposures to COVID-19, which AGC was successful in limiting the scope to confirmed, work-related cases, Sandherr says.

The first $8.3 billion spending bill, signed into law March 6, mostly dealt with testing kits and medical supplies, and does not directly apply to construction.

A second bill, HR 6201, the $105-billion Families First Coronavirus Relief Bill, signed into law March 18, includes provisions for paid sick leave and paid family and medical leave, taken on or after April 2, 2020. The provisions end on December 31, 2020. Two weeks of paid leave applies to businesses with fewer than 500 employees. The bill outlines reasons for leave and required wage replacement.

Family and medical leave applies to people employed for 30 days or longer, and AGC succeeded in convincing Congress to make it for 10 weeks, rather than 12 weeks. A possibility exists that the Secretary of Labor could exempt businesses with fewer than 50 employees.

“AGC will be sending word to the Secretary of Labor strong support for those exemptions,” Christianson says. “These paid leave mandates are in addition to existing mandates at state and local requirements.” At press time, Congress was considering a third bill for business relief and government checks to people across the country. A fourth action may happen, which could include infrastructure spending, which Sandherr says is needed to help the industry and its nearly 8 million employees.

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