In this very unusual time, construction projects face many challenges. Project management services are specifically suited to represent the owner’s interests in managing risk through all economic conditions and guide projects to successful outcomes. Well-managed projects can help building occupiers be successful in their business ventures and ultimately support global recovery. With that in mind, we recommend evaluating critical components of four key project areas:
1. PROJECT ASSESSMENTS:
Active Projects that have NOT been affected or have been deemed “essential”
- Projects that will continue with little disruption, but still need to follow new Covid-19 protocols to keep on site staff safe and healthy.
Project Closures or "non-essential" projects
- Project Managers should work closely with the general contractor to safely shut a project site down and ensure a safe and compliant site for the duration of the closure.
For both project types, Project Managers should be creating a “risk register” that will help them analyze and understand the potential impact on several areas, including MSA and project work orders, supply chain, financials, and scheduling.
Documentation is essential. The environment and circumstances around us are changing daily. Having well documented project charters, risk registers and change orders will be in all parties’ best interest 3, 6, or 9 months from now.
2. SUPPLY CHAIN IMPACTS
The second area of focus is on the Supply Chain with a specific focus on 10 major categories: Flooring, Ceiling, Furniture, HVAC, Lighting, Roofing, Paint, GCs, Architects and A/V.
We are evaluating each these categories across 3 areas: existing inventories, manufacturing capabilities, and logistics. Understanding material specifications, replacement options, and associated risks is critical at this point.
RELEVANT GLOBAL CONDITIONS
- Furniture: Suppliers are trying to determine how stay-at-home mandates will affect business operations and are prioritizing orders and clients to determine which customers might fall into the “essential” category, which would allow them to remain at least partially open to service those clients.
- Lighting: Most commercial items made in the US/Mexico, but there is potential for lighter than normal supply in April/May.
- GCs: Major cities are shutting down across the country and enforcing work stoppages, some cities have deemed “project work” as essential, so it is critical to understand local mandates. In addition, with non-essential local government functions shutting down, we are anticipating systemwide disruptions with regards to both plan check reviews and field inspections. However, some good news is that some municipalities are implementing virtual inspections for building-only inspections (building, electrical, mechanical, plumbing, energy and CofO), not fire or health.
- Most suppliers are confirming that manufacturing in APAC remains largely unaffected and that the impact now is downstream with regards to customs clearance and installation as countries are going into lockdown. Continuity of supply is impacting several EMEA countries currently in lockdown (Germany, Italy, France, etc.). Project managers are advised to look at line-item details to discern prospective impacts to unique items with longer lead-times.
- Logistics and port clearance are adding expected delays across most categories. Countries closing borders are also negatively impacting continuity of supply. Countries are shutting down customs and/or rerouting shipments, including “air carrier” deliveries which have been suspended to “most” countries.
- Audio/Visual & Technology: This is the one area we are seeing delays across all 3 regions, with products such as power cords, power products, power components and raw materials coming from China. Product lead-times have increased from 2 to 6 weeks on custom power products. Alternative sources for similar products have been identified to augment shortages but delays are expected in the short term.
Staying close to supplier partners and understanding supply chain impacts is essential for both active and on-hold projects. It is imperative that we understand the impacts and ensure we are “first in line” when projects re-activate.
3. CAPITAL PLAN ASSESSMENTS
All companies and project teams should be taking advantage of this time to reevaluate their Capital Plans to reallocate funds to better align with a company’s revised goals and objectives.
A complete review of the capital plan should include:
1. Identification of in-flight/on-hold activity
2. Revised action plan for what can realistically be completed in 2020
3. Analysis of the plan’s cashflow forecasting across regional/building/project-by-project basis
4. Expense reduction strategies – value engineering, cost segregation, and excess space compression and/or elimination
5. Ability to move capital around fluidly, potentially deploying capital in other higher priority areas
6. Ongoing Financial Monitoring – e.g. monthly or even weekly real-time updates, exec summaries and dashboard views of the plan
4. PROJECT RE-ACTIVATION
1. Staffing – Having trained and skilled project managers ready to step in and re-start projects will be the priority. That means we must keep these professionals staffed and properly incented and utilized during this time, which could prove to be difficult for many.
2. Supply Chain – we need to be “first in line” for all critical supply chain materials that may have been affected.
3. Capital – Capital Planning steps taken now will prepare us for when the flood gates open. This requires that you update your Capital Plan now, garner required signoffs and be poised to move quickly when work restarts.
4. Finally, substantiate confidence and trust in the future of the firms and partners you have in place across the project lifecycle. Having a trusted team in place today will lead to better outcomes tomorrow.