covid19

THE IMPACT OF COVID-19 ON CONSTRUCTION

By Hank Kita, STA Executive Director

It would be an understatement to say that the COVID-19 crisis will change the trajectory of our New York City construction industry for a long, long time.

The construction boom that we have enjoyed over these past 10 years is over, at least for now.  The economy will be slow to bounce back in the coming months and private and public money will not be there to start new or continue old projects.

In the midst of this crisis, most construction contractors will have two priorities: (1) the health and welfare of their employees, and (2) addressing delays on projects and remobilizing in the face of a labor shortage and materials.  We are already witnessing the slow and uncertain approach to what will be appropriate health and safety protocols for the subcontractor’s workers.  Likewise, we are seeing interruptions in the supply and material chain as well as a shortage of personal protective equipment for those construction workers who are still on active/essential jobsites.

Once the worst of the crisis passes, it will be the priority of construction contractors to deal with the financial impacts left by an economy that will be in recession.  The severity of the recession will govern the ability of the construction market to return to some type of normalcy.  We have seen this situation in the not too distant past, specifically during the great recession of 2008.  Many of the same issues following the 2008 financial crash will no doubt be around when the COVID-19 crisis progresses and eventually runs its course.

Both public and private owners will manage their finances very closely and will handle claims in a way that is to their advantage, even more than in normal times.  You can bet that the owners and general contractors will pay slowly or in a way that may seek to create or pursue claims to justify never paying.  Also, you can expect that the pot of money to pay claims will have shrunk with multiple claims being filed against a limited amount of funds.  Litigation will likely become more prevalent as contractors struggle to be paid and made whole.

This is obviously not a pretty picture for our subcontractor members.  The coming months and maybe even years, will be very difficult.  The STA will be on the frontline providing information and advice for our members trying to navigate the currently “paused” construction market.  This includes information crucial to subcontractors emanating from the federal, state, and city level, as well as the real estate and labor sectors.  As we continue down the road paved by the COVID-19 crisis, the STA will advocate on behalf of our members with public and private owners as well as construction managers and general contractors on financial and operational issues that impact our subcontractors during these tough times.  The STA will do everything in its power to make certain that our members successfully navigate the COVID-19 crisis and as we did in 2008, survive to fight another day!