More than six months into the COVID-19 pandemic, flexibility and planning for the unexpected top the list of necessities when it comes to undergoing construction projects within seniors housing. That’s according to speakers at a webinar for institutional investors Wednesday, hosted by specialty investment bank Ziegler.
One of the biggest challenges has been sourcing the materials, said Doug McMillan, president of construction consultant company zumBrunnen. Production shutdowns and slowdowns at manufacturing facilities have triggered shipping delays, which have affected contractors’ ability to obtain needed supplies. To combat this, McMillan noted, many contractors have been ordering materials much earlier on in the process — leading owners sometimes to pay for raw materials well before they’re fabricated.
“We’ve had contractors buy all the copper wire for a project at the very beginning, whereas in normal times that cost would be more spread out over time,” McMillan said. “So we’ve had to be a bit more flexible with our payment terms, while still working to protect owners and investors from risk.”
McMillan added that he’s also been advising clients to include very specific COVID-19 clauses in any new construction contracts. Some pandemic-related events will be completely out of a contractor or owner’s control, such as if a governor decides to shut down an entire state. But other problems can be greatly mitigated with precautions, he said. For example, if a contractor isn’t taking the time to screen workers or visitors to the job site, or allowing laborers to disobey state guidance in terms of mask-wearing, then setbacks are all but assured.
“Allowing infected workers on your site and not monitoring that can cause a large outbreak and significantly increase an owners’ cost by delaying the project,” he said.
Frank Muraca, president of Arch Consultants, also recommended putting extra contingencies in place, both time- and budget-wise. The permitting and inspection processes continue to take longer than usual due to back-up logs and difficulty in coordinating access to job sites, he said. In addition, given ongoing travel restrictions across many states, it’s important for all involved to leverage technology whenever possible. That can mean arranging for more aerial photos to be taken, gaining access to security camera footage of a job site, or using drones for exterior inspections.
“We’re adapting but it’s definitely a different world right now,” McMillan said.