(This post was included in the Florida Transportation Builders’ Association weekly newsletter.)
As contractors work through the coronavirus (COVID-19) pandemic, many contractors have been impacted in their ability to timely and efficiently complete projects. COVID-19 impacts to a project may result in increased completion costs, including labor inefficiencies, increased equipment costs, and additional material costs. A contractor may attempt to seek those increased costs from the project owner, a subcontractor, or an insurer.
Regardless of who may be responsible for COVID-19 impact costs, it is very important that a contractor properly track those costs while the project is being built. Contemporaneous records of increased costs are the gold standard for effectively proving entitlement to additional time to complete a project or obtaining more money for impacts to a job. COVID-19 impacts should be noted in meeting minutes, correspondence, and any change order(s).
Also, while it is always important to take frequent pictures and video recordings during construction of a project, it may be particularly important to show the impacts of COVID-19 on a project. For example, if construction crew members are forced to work at least six feet apart from each other when normally they would be working shoulder to shoulder, pictures and video of crews being forced to work in such a potentially inefficient manner would be beneficial when trying to prove a contractor’s claim.
In addition to contemporaneous records, it would also be ideal to track any COVID-19 impacts with a new cost code. Each cost code should reflect daily payroll records, equipment costs, subcontractor costs, and information about the progress of the work. If work progress is recorded in this level of detail from the beginning of the project, it will also make it easier to prove how an impact to a project, such as COVID-19, caused inefficiencies with the work. That can be done by comparing the contractor’s work progress during an unimpacted period of time with the contractor’s work during the time period the contractor’s work was disrupted.
Generally, the more categories of costs that can be tracked, the better. This can make it easier on the backend to easily present the detailed cost impacts to a project. It also makes it far simpler to remove any costs that may not be allowed under the contract between the owner and the contractor or an insurance policy.
In short, while it a burden to track COVID-19 impact costs at the same time a project is being built, it is an investment that may pay great dividends when and if a contractor has to make a future claim. The key is to make a game plan now for tracking COVID-19 impacts and costs so that as those impacts occur, the contractor will have a great record to support its claim. Otherwise, a contractor may find it difficult, if not impossible, to prove its claim and may be forced to absorb additional COVID-19 costs.