Market Watch – The CoronaVirus – Is Construction an Essential Business?

Ever since the CoronaVirus landed on the United States it’s impact has been uncertain.  Having witnessed the impact it had in China, we collectively braced for impact, but I don’t think anyone thought it would have the effect that it has.

Two week’s ago, I reported that New York, New Jersey, and Pennsylvania had been placed under lock-down by the Governor’s of each state.  Since then several states have followed suit.

According to Business Insider.com 36 states plus Washington DC and Puerto Rico are under stay-at-home orders.

A federal directive has yet to be issued as the number of infected persons in the US reaches over 300,000 cases.

Each of the 36 states have generally ordered everyone to stay home and avoid physical contact by observing social distancing of 6 feet or more.  All gatherings of 50 or more have been cancelled and areas where people typically congregate like beaches and state parks have been closed.  I have heard some anecdotal stories of police breaking up “Corona Parties” of 50 or more people defying the order.

For the most part, businesses have been shuttered and over 3 Million people have filed for unemployment, but some businesses have been allowed to continue operations.

Businesses that can operate remotely and businesses deemed “essential” have been allowed to remain open, but determining whether a business is “essential” has proven to be more difficult than expected.

The construction sector has had an especially difficult time determining how to proceed.  This is due in part because of the disparity from state to state and a lack of a federal mandate.

Federal Guidelines

On March 28th the Department of Homeland Security Cybersecurity & Infrastructure Security Agency (CISA) issued these guidelines to help clarify which businesses can be considered “essential”.

The updated guidance identifies construction of public works, infrastructure, and energy sector as “essential”.  It also stated that, Plumbers, electricians, exterminators, builders, contractors, HVAC technicians, landscapers, and other providers of services necessary to maintain safety, sanitation, and essential operation of residences, businesses and buildings, such as hospitals, senior living facilities” were considered essential.

The guidelines also allows support personnel such as Architects, Engineers, and Building Inspectors to continue operations.

The problem is that these guidelines are considered “advisory” and because we do not have a federal mandate, each state has interpreted these guidelines differently.

New York

According to Cozen O’Connor all non-essential construction in cooperatives (coops) and condominiums (condos) must shut down immediately unless the work is necessary to protect the health and safety of building occupants, but non-essential construction work that requires only a single worker, who is the sole employee/worker on a job site, may continue

Massachusetts

Gordon Rees Scully Mansukhani tells us that in Massachusetts the list of “essential services” that can continue to operate as usual includes construction projects.

New Jersey

In New Jersey the Department of Community Affairs has issued guidelines temporarily relaxing certain code regulations and is allowing inspections to be done over video conference, however, construction work is allowed to continue.  No restrictions or provisions have been made to differentiate essential from non-essential construction.

Pennsylvania

Pennsylvania remains under lock-down limiting construction activities to, “emergency repairs…limited to performing those tasks necessary to provide repair services to customers. No new construction or non-emergency rehabilitation or remodeling may be performed.

Minnesota

In Minnesota construction work has been unaffected by the shelter-in-place order, but I heard anecdotally that landscapers are not allowed to work.  One colleague commented, “you can build a retaining wall in your garden, but you can’t plant the trees

Outside the US

Other countries have taken a more cohesive approach and are addressing shelter-in-place orders at the highest levels, but even under nationwide quarantine there is confusion.

United Kingdom

In the UK the Prime Minister announced a nationwide lockdown clarifying that, “construction sites could remain open if done safely and provided that the government guidance on social distancing was adhered to.”  However, in the days that followed confusion was added when direction was given differentiating between work that was done in open air versus work being done in an occupied space.  Party leaders like Jeremy Corbyn called for construction sites to be closed which only added to the confusion.

Canada

Canada which has 15,000 cases has yet to issue a shelter-in-place order or order businesses to close.  As such construction work continues, but the impact of the virus is being addressed by the government by suspending limitation periods.  This step extends the period for filing claims and liens in Canada.

Closing

As the virus continues to spread and we track closer and closer to the peak of infections, we can expect more and more governments to act.

The impact on construction is widespread.  Stop work orders, modified inspection procedures, and extended periods of liability are all impacting construction around the world.

It’s important to be aware of how COVID 19 is impacting your projects.  Each jurisdiction is different and the rules continue to change, so stay aware and be prepared.

What about you?  Are your projects impacted by government orders?  What other changes are you seeing?  Tell me your stories.

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