Insights & News

UPDATED: Construction in the Age of Coronavirus

April 21, 2020

Client Alert

IN THIS ISSUE:

Construction in the Age of Coronavirus
Update 1
Update 2
Update 3
Update 4
Update 5
Update 6
Update 7
Update 8
Update 9

March 19, 2020

Construction in the Age of Coronavirus
Though the COVID-19 pandemic is still in its early stages, it is already having an effect on construction projects. Some jobs have already been put on hold. Others are at risk for the same fate, as owners and the government seek ways to slow the progression of the disease. As this pandemic continues spreading across the nation, more severe consequences may be anticipated.

In Pennsylvania, Governor Wolf has indicated that construction activities may continue (at least for now). Nevertheless, projects may face labor shortages as workers stay home due to illness or to avoid exposure in the first place. Vendors may have a difficult time meeting orders. Nervous owners may allow projects to continue but impose workforce restrictions such as manpower reductions to impose distancing or temperature monitoring for access to projects that involve occupied spaces. The full effects of this devastating virus will not be known for some time.

Contractors, owners and performing sureties would be wise to get on the front end of these issues. Consider whether your contract documents contain any of the following provisions and, if so, what notice, pre-conditions and documentation requirements are imposed:

Force majeure
Suspension for convenience
Delay damages
Acceleration
Impossibility/frustration of purpose

Many standard form construction contracts contain provisions that are not labeled as “force majeure” provisions but which nevertheless excuse non-performance for act “beyond the contractor’s control.” And even if the contract documents do not address this situation created by the coronavirus, the common law has doctrines that might apply. For example, the law in most states will recognize impracticability as a defense in certain circumstances. Most standard form construction contracts have provisions addressing the ability of the owner to suspend work and what recourse the contractor may have in that option were to be invoked. For example, most AIA forms address when a contractor may terminate in the face of a government-imposed shutdown.

Review your contract documents now to identify every provision that might be invoked by you or against you. Take special note of the notice requirements. If you haven’t done so yet, begin a dialogue with the other project participants: the owner, the general contractor, the subs and the suppliers. It would be good if a plan could be developed cooperatively. And if that won’t happen, it would be good to know that too. Keep detailed records regarding any delays and costs you may be experiencing. Whether these are recoverable is a different issue, but such documentation may be crucial to advance or defend a claim. If you are about to enter a new contract, consider whether its provisions need to be modified to reflect the new reality the virus has created.

Please do not hesitate to call on the Stradley Ronon Construction Group for assistance regarding these issues.

March 20, 2020

Update 1
Last evening Pennsylvania’s Governor ordered all non-life sustaining “places of business” to close. Construction activities are now included on the list of activities that may not “continue physical operations.” Enforcement begins just past midnight on Friday.

There is a process for seeking clarifications (e-mail RA-dcedcs@pa.gov) and waivers and exemptions (e-mail RA-dcexemption@pa.gov).

Please do not hesitate to call on the Stradley Ronon Construction Group for assistance regarding these issues.

March 21, 2020

Update 2
Late on Friday, the Pennsylvania Gov. Tom Wolf slightly revised the list of what is and what is not life-sustaining. The list is linked here. The list indicates that construction activities are excepted if they involve emergency repairs or construction on health care facilities. Enforcement has now been pushed back until Monday morning at 8:00 a.m. A waiver form has now been provided on the website. The FAQ section offers the following guidance relating to construction:

13. Construction was classified as non-life-sustaining. Should all construction companies suspend in-person physical operations? Can a construction company continue projects related to road repair, road completion, flood mitigation, etc.?

Construction activities not clearly authorized under the OHS Guidance should suspend general operations, but may maintain specific limited operations necessary to ensure compliance with federal, state, or local regulatory requirements.

Please do not hesitate to call on the Stradley Ronon Construction Group for assistance regarding these issues.

March 22, 2020

Update 3
Today, Mayor Kenney signed an emergency order prohibiting non-essential business operations within the City of Philadelphia. You can read the full order here.

Essential activities are described as including construction for:

i. All medical, pharmaceutical, and healthcare facilities (including non-emergency construction)

ii. All emergency projects or other projects deemed essential by the City of Philadelphia, while appropriately balancing public safety, to ensure the continued delivery of critical infrastructure services and functions by the City (“City Essential Infrastructure Projects”)

iii. Emergency repairs for “Residential Building Construction,” “Nonresidential Building Construction,” “Utility Subsystem Construction” (related buildings and structures for utilities, i.e., water, sewer, petroleum, gas, power, and communication, and all structures that are integral parts of utility systems); “Highway, Street, and Bridge Construction,” “Other Heavy and Civil Engineering Construction,” “Other Heavy and Civil Engineering Construction,” “Foundation, Structure, and Building Exterior Contractors,” Building Equipment Contractors,” “Building Finishing Contractors,” and “Other Specialty Trade Contractors”

As it relates to non-essential construction, the order provides:

Operators of non-life sustaining, non-emergency construction in Philadelphia shall have until 5:00 p.m. on March 27, 2020, to make construction sites safe and secure. Contractors are directed to take proper measures to protect adjacent properties, remove or fasten items that are or could become loose, secure sites against trespass, and complete work necessary to protect and ensure the structural integrity of buildings under construction. Occupied residential properties must be left in safe and habitable condition.

Please do not hesitate to call on the Stradley Ronon Construction Group for assistance regarding these issues.

March 24, 2020

Update 4
Today, Pennsylvania Gov. Tom Wolf updated the list of business types that may continue physical operations, in relation to the Governor's Executive Order mandating closures for COVID-19 mitigation. You can access the full list here.

March 30, 2020

Update 5
On Friday, March 27, 2020, Pennsylvania issued some new guidance regarding construction activities in Pennsylvania.

The Governor amended the frequently asked questions (FAQ) regarding which businesses may continue physical operations. In relation to residential construction, the new guidance offers the following:

May I complete my customer’s residential construction project?

Residential construction projects that are substantially complete may continue to completion. For all other residential construction projects limited activities may continue to the extent necessary to stabilize the site, temporarily prevent weather damage, or make emergency repairs only. Projects that are “substantially completed” are those projects that have been issued a final occupancy permit. No new residential construction projects may be started.

The Pennsylvania Department of Education announced new guidance relating to school construction. The DOE website now offers the following guidance:

Must school districts seek a formal exemption through the Pennsylvania Department of Community and Economic Development (DCED) to continue construction projects?

School districts should use best judgment in exercising their authority to continue critical construction projects and should not seek a formal exemption through DCED. All school district construction decisions should appropriately balance public health and safety while ensuring the continued safety of critical infrastructure. School districts and the contractors must ensure continuance of and compliance with the social distancing and other mitigation measures to protect employees and the public, including virtual and telework operations (e.g. work from home) as the primary option when available, as have been or will be established by the Department of Health and the Centers for Disease Control and Prevention. In-person work is only to be performed on the most limited basis possible.

April 2, 2020

Update 6
Yesterday, April 1, 2020, Pennsylvania Gov. Tom Wolf updated the list of business types that may continue physical operations and amended the frequently asked questions (FAQ).

The new guidance includes a deadline for exemption applications for businesses that are not life-sustaining but want permission to keep operating. The process for such applications will close this Friday, April 3, 2020.

April 9, 2020

Update 7

New Jersey Gov. Phil Murphy recently signed an executive order announcing that the physical operations of construction projects must cease by Friday, April 10, 2020, at 8 pm with the exception of the following “essential” construction activities:

Construction related to health care facilities and pharmaceutical manufacturing facilities,
Transportation infrastructure including airports and seaports,
Public utility work,
Affordable housing construction,
Schools,
Completion of residential construction involving homes or occupied apartments (construction crew sizes must be five or fewer),
Completion of unoccupied residential units under contract,
Manufacturing and distribution facilities providing goods or products to online or essential retail businesses,
Projects involving “data centers” or “facilities that are critical to a businesses’ ability to function,”
Construction of homeless shelters and other essential social services,
Construction activities supporting first responders and law enforcement,
Government projects,
Work necessary to safely secure the site of any non-essential project, and
Emergency repairs to residential dwellings.

Essential construction projects that are allowed to continue must follow stringent safety requirements including:

Prohibit non-essential visitors,
Work site meetings must be fewer than ten individuals,
Six feet of physical separation wherever possible,
Staggering start and stop times,
Staggering breaks,
Restrict concurrent access to common areas,
Face coverings,
Specified infection control practices,
Restricted sharing of tools,
Making sanitizers available, and
Sanitizing high-touch areas.

Please do not hesitate to call on the Stradley Ronon Construction Group for assistance regarding these issues.

April 21, 2020

Update 8

Yesterday, Pennsylvania Gov. Tom Wolf updated his executive order on life-sustaining businesses. Limited construction activities may resume on May 8, 2020, and other changes have been made.

The updates regarding the orders by the governor, the associated order by the Health Secretary, the new chart of life-sustaining businesses and business FAQ are linked here.

The Governor’s Order says:

Limited construction activity is authorized to commence in-person operations statewide beginning on May 8, 2020

The new chart provides the following guidance regarding construction:

Emergency repairs permitted. Beginning May 8, 2020, construction permitted as authorized by the Governor’s and Secretary of Health’s April 20, 2020 amendments to their business closure orders and in strict compliance with the Administration’s guidance.

For information regarding the Pennsylvania Department of Health safety order, click here. To view the frequently asked questions (FAQ) of the Pennsylvania Department of Health safety order, click here.

April 24, 2020

Update 9

Yesterday, Pennsylvania Gov. Tom Wolf accelerated the date of reopening limited construction projects in the state amid the coronavirus pandemic. The new guidance, linked here, allows previously non-essential construction activities to begin on May 1, 2020:

Beginning May 1, 2020, all businesses in the construction industry in the Commonwealth, including those in the new construction, renovation, and repair, as well as land subdivision and design-related field activities, are permitted to maintain in-person operations pursuant to the Governor’s and Secretary of Health’s April 20, 2020, amendments to the Business Closure Orders so long as their activities strictly adhere to this guidance. Construction projects previously granted an exemption to continue in-person operations may continue operations but must adhere to this guidance.

Prior to May 1, all businesses in the construction industry should continue to follow existing Administration orders and guidance and may continue to maintain in-person operations to the extent authorized by any existing exemptions.

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.