In response to COVID-19, construction projects in California are currently subject to a statewide Executive Order and potentially other similar (or dissimilar) “stay home” or “shelter in place” orders or directives issued by counties and cities. Under the California statewide order, only businesses needed to maintain continuity of operations of identified federal critical infrastructure sectors (click here for the list) may continue to operate. Construction is not identified as a separate “critical infrastructure sector,” but many construction projects fall under the umbrellas of other sectors, such as “critical manufacturing,” “energy,” “healthcare,” and “commercial facilities.” The California State Public Health Officer also designated the following “essential workforce” members of relevance to the construction industry (this is not an exhaustive list):

  • “Construction Workers who support the construction, operation, inspection, and maintenance of construction sites and construction projects (including housing construction)”
  • “Workers such as plumbers, electricians, exterminators, and other service providers who provide services that are necessary to maintaining the safety, sanitation, construction material sources, and essential operation of construction sites and construction projects (including those that support such projects to ensure the availability of needed facilities, transportation, energy and communications; and support to ensure the effective removal, storage, and disposal of solid waste and hazardous waste)”

One challenge somewhat unique to owners and contractors is that the applicable orders are generally directed at identifying “essential businesses” or “critical businesses,” while owners and contractors may have a mix of projects—with some likely essential (such as construction of a hospital), others likely not (such as construction of a nightclub), and many falling in a grey area in between. When analyzing “grey area” projects it is recommended to focus on the traits of the particular project rather than attempt to understand whether your business—which may include a range of projects—can generally continue to operate.

On March 25, 2020, Washington Governor Jay Inslee issued a memorandum that provided members of the construction industry with additional guidance regarding the Stay Home, Stay Healthy Proclamation (20-25) issued on March 23, 2020 in response to the COVID-19 pandemic. The Proclamation raised a number of questions in the industry, including whether all residential construction was deemed an essential service. The Proclamation seemed to indicate in a parenthetical that “housing construction” was permitted but then went on to limit “residential construction” to “emergency repairs and projects that ensure structural integrity.” Because of the resulting confusion, some residential projects began shutting down, while many did not, with the trades on those projects expecting to continue with work.

Yesterday’s memorandum confirms that there is no blanket treatment of residential construction under the Proclamation, and not all residential construction is an essential service. Just as with commercial construction, for a residential construction project to proceed, it must fit into one or more of the following:

  1. Construction related to essential activities as described in the order;
  2. To further a public purpose related to a public entity or governmental function or facility, including but not limited to publicly financed low-income housing; or
  3. To prevent spoliation and avoid damage or unsafe conditions, and address emergency repairs at both non-essential businesses and residential structures.

If you are involved in the construction industry, like it or not risk management is part of your job. From home office executives to workers in the field, each person is expected to manage schedule, cost, and safety risks. While these risks are common, the recent prolonged period of economic growth has created new challenges,…

For most in the industry, when we think about a standard construction contract, we envision the construction documents being drafted by the architect and other design consultants.  We tend to view the project as design-price-build, unless an alternative procurement mechanism has been selected such as design-build.  Consistent with this design-price-build model, the contractor’s review of…

The biggest construction project in Seattle in recent years has been the replacement of a seismically compromised waterfront viaduct with a tunnel carrying State Route 99 under downtown. The project was delayed for about two years while the contractor repaired damage to its tunnel boring machine. The contractor claimed that the damage was caused by…

Worker hammering a nail on construction site.
Construction worker.

In the event of a near-term slowdown in the U.S. economy, analysts forecast that any resulting decline in construction starts will nevertheless leave the level of activity in that industry sector “close to recent highs.” As a result, project owners and general contractors already facing a strong demand for…

The Daily Journal of Commerce recently reported that increased demand for mass-timber material, such as cross-laminated timber (“CLT”), has caused a shortage as suppliers struggle to expand production.  Iain Macdonald, an industry executive interviewed for the article, stated that “lead times of a year have not been uncommon.”  Increased demand has been fueled in part…

In a recent article in the ABA’s “Under Construction” publication (link here) the author describes a trend among some major contractors, including SNC-Lavalin, Fluor Corporation and Granite Construction, to leave the DB and EPC space.  Other large contractors have announced similar intentions.  The problem appears to be that the DB and EPC delivery methods…