Agile Construction® Blog

The True Cost of COVID-19 In Construction

Jul 16, 2020 10:49:16 AM / by Nicholas Aloisio

 

When we all first learned that COVID-19 had arrived on our shores, there was the hope that it wouldn't be as serious as originally thought.  While there are arguments on both sides as to the actual seriousness of the illness itself, there is no question as to the crushing effect on the economy and business in general, and for the purposes of this blog, the construction industry.  While there is little question that the effects have been crushing, many companies are still struggling to quantify the actual downstream causes and their overarching impacts on their construction projects and business as a whole.  This blog will take a look at 3 of the top factors that are causing costs to skyrocket as well as how to effectively track and measure them moving forward for the sake of your own business.  All of the data shared here has been gathered through research on actual job sites as well as taken from our WEM® software suite of JPAC® and SIS®.

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1: Absenteeism

There is very little question that employees are missing work at a record pace.  What isn't necessarily visible on the surface, however, is the actual downstream effects that it is having on your projects.   The construction industry was already in the midst of a shortage of skilled labor and COVID-19 has accelerated that problem.  Since we have less of a pool of qualified workers and project schedules still must be met, higher overtime has become a major problem that was not originally planned for. 

 

Productivity Has Actually Increased

What is very interesting and is contrary to other published articles on the subject, is that productivity has actually INCREASED.  The main reasons?    There are two of them. 

1.Since your field team must social distance themselves, they are not tripping over each other and other trades any more.  This allows them to work more efficiently and effectively.   

2. The workers that are showing up to job sites are typically your higher paid, more skilled workers.  Why?  Because many others have chosen to collect the higher unemployment offered through the federal government.

While higher productivity is certainly a good thing and allows us to complete the work faster, the flip side is that because the majority of your team is more skilled, that means you are paying them to complete less skilled tasks like clean up, sweeping the floors, assembling fixtures, etc.  This, ultimately is driving costs higher and higher.

 

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2: Cleaning 

If absenteeism is the number one factor driving higher costs, new processes and procedures to protect workers is a close second.  Quantifying these processes is going to vary from company to company but, the fact remains, that every project will have some guidelines in place.  Everything from temperature checks before gaining entry to cleaning and disinfecting tools between use will drive higher costs.  If you aren't able to measure and track these additional costs, there will be no way to plan for them in upcoming projects or make adjustments to existing projects.  It is critical to begin tracking these effects through tools like JPAC® and SIS®.  Failure to do so is basically flying blind.

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3: Schedule Delays

Delays in schedule are nothing new to the construction industry, but never have they been more prevalent than now.  Jobs are still shutdown all across the country and the downstream effect of those shutdowns is that your backlog will be effected as well.  What else will be affected?  Cash flow is a big issue.   You've planned for upcoming work and now that work will be delayed or in some cases cancelled altogether.  How do you plan for that?  How do you measure the impact of these current delays or cancellations?  I hate to sound redundant but, as an industry, we must all track these impacts individually.  Knowledge of baseline national data is ok, but that doesn't tell you how it is affecting your company and individual projects.  Every company and every project is different.  Never has tracking and measurement been more critical than it is right now.   

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Topics: construction productivity, jpac, sis, production tracking, construction software, improve estimate, estimate accuracy, construction estimate, agile construction, improve productivity, covid19, coronavirus

Nicholas Aloisio

Written by Nicholas Aloisio