Category: Construction Law – Change Orders / Construction Contracts
COVID-19: Change Orders, & Construction Contracts
COVID-19 Continues To Affect Construction
In this free webinar, construction attorney Joe Katz reviews the various ways COVID-19 has affected change orders and contracts within the construction industry. Additionally, Joe covers several different best-practices that General Contractors and Subcontractors may utilize to protect their businesses, moving forward. While nothing beats having a skilled construction attorney to review your materials, there are many simple methods a contractor may use to strengthen their rights and receive payments on time, even during COVID-19.
In April, COVID-19 eviscerated over 975,000 construction jobs. (For perspective, the Great Recession of 2008 claimed 2.3 million construction jobs.)
The US Bureau of Labor Statistics reported an increase of 26,000 construction jobs in September – however, these gains were “concentrated in housing” while the “infrastructure and nonresidential building construction sector remained little changed.”
Regardless, construction employment is still well below pre-COVID-19 levels – by 394,000 jobs.
Contractors Must Be More Careful Than Ever
Additionally, contractors throughout the nation lost an average of 1.5 months of backlogged work in September. Add-in the factors of rising lumber prices (the average home now costs approx. $16,000 more to build), and it becomes clear that construction contractors must be more careful than ever in order to know their rights and protect the interests of their business.
COVID-19 Best-Practices Tips for Construction Contractors
Fortunately, construction contractors have a myriad of tools at their disposal to protect themselves. If you are a contractor, here are a few best-practices tips to utilize within your own operations:
Preserve your deadlines.
- As projects continue to experience delays due to COVID-19, contractors must remember that even when a project is shut down, the deadlines have not stopped running:
- Deadlines will continue to run.
- Limitations will continue to run without government intervention.
- Mechanic’s liens & payment bond claim deadlines will continue to run.
Change orders may recoup COVID-19 related costs.
- In most cases, if a change order is approved, you have secured your rights to payment for the work completed.
- If work was completed without an approved change order (whether due to emergency work related to COVID-19 or the subsequent delays & consequences of government shutdowns), an extensive review of your contract materials is needed to determine your eligibility for a claim.
- Moving forward, contractors should work to implement any and all COVID-19 related costs within their change orders, like material price increases, delays from labor shortages, productivity losses, home overheads, etc..
Include terms favorable to your business within future contracts.
- Contractors – especially subcontractors – should always seek to include favorable terms within their construction contracts.
- Include terms that plan for the potential of future shutdowns, increasing prices, and volatile labor markets.
- Seek help from an experienced construction attorney to review, negotiate, and draft your contracts.
Have an Experienced Construction Attorney Review Your Case
Ultimately, the jury is still out regarding some of the claims that COVID-19 may cause. To ensure that your rights are actively preserved & protected, please consider having an experienced construction lawyer review your right to a claim. Additionally, utilize a construction lawyer when negotiating, drafting, and reviewing future contracts to ensure that COVID-19 related delays never again affect your rights to payment.
Watch The Free Webinar To Review a Live Q&A
Katz law partnered with Levelset to present this free webinar presentation on change orders in construction titled “Change Orders and COVID-19: Know Your Rights and Protect Your Business,” presented on Wednesday, 10/21/2020.
Lastly, there were multiple insightful questions raised by subcontractors throughout the presentation in regards to COVID-19 & change order procedures. Please watch the entire video to learn more.
We hope you find value in these free resources.
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