Business and Legal Insights

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.