Perspectives of leaders and professionals

COVID-19: PROFESSIONAL PERSPECTIVES

Amanda White, PQS

President, Foresight Atlantic Inc .

Q: Do you see a change in the approach to preparing cost estimates?

A: The approach to preparing cost estimates will include a higher level of consideration of the supply chain for materials and labour, and risk management for interruption . A key shift that is already happening is consideration for time . This is important, as we continue to integrate physical distancing on job sites . As a result, I would expect a jump in carrying costs and general conditions for upcoming tenders for projects set to start in 2020 / 2021 .

Q: What do you think will be the impact on the prices of construction materials?

A: We are facing a global recession and prices tend to fall during a recession . However, this is a simplistic theory and will depend on supply and demand scenarios or the state of the economy in places from where the materials are obtained . Costs of materials from China or India may increase as their GDP remains positive, according to the World Economic Forum . But it is too early to tell; if demand for overseas materials decreases, the pendulum could swing the other way .

Q: How will remote working impact the demand on the commercial property sector?

A: As tenants and landlords adjust to the changes in maintaining a safe environment for employees and clients, the size and layout of commercial spaces will likely change to accommodate a cultural shift . You may see corporate offices leasing smaller spaces as they start to permanently work remotely and only come to the office periodically . It will be interesting to see how retail adapts – they may need larger spaces to operate effectively or go, in part or completely, to online shopping .

Daniel Josiah, PGDip, PQS, MRICS, GSC, ACIArb

Director, Contracts & Commercial, Lakeland Consulting Inc .

Q: How are you dealing with working remotely or away from the office?

A: Working remotely for most people means working from home and that can have its challenges and distractions . With a young family, the key for us was to make sure that some routine was in place, recognizing that we all have differing schedules . Taking turns to watch the children and switching workdays with weekends (where possible) has also helped .

Q: Will the COVID-19 crisis change how business is carried out in the future?

A: COVID-19 has compelled businesses to change the way certain interactions are carried out . For example, web conferencing (Zoom, Teams, Skype) has allowed businesses to continue operations that would typically be carried out face to face . These tools have been available for some time, and some industries utilize these more than others, however; the up-take of such tools will no doubt accelerate due to COVID-19 .

Q: How do you think that social distancing will impact day-to-day activities on construction sites?

A: As work on essential construction projects has continued, we have seen physical distancing and sanitation measures implemented . This has meant site labour has had to plan and ensure that they are maintaining physical distancing measures even prior to commencing and during daily work activities and sanitizing at regular intervals . This will have an impact on productivity levels .

Ian B. Duncan, PQS(F), MRICS, GSC

Principal, Atrium Consultants

Q: How long do you think that it will take for the construction industry to return normal state?

A: The construction industry has always been dynamic and resilient . Because governments rely so much on the industry as a major contributor to the world’s economies, as soon as the constraints are lifted the world’s governments will have no choice but to support the construction sector as a priority to get money flowing ASAP .

Q: Do you see change in the approach to preparing future cost estimates?

A: In lump sum contracts, GCs pass on most of the risk to the Subcontractors . Fear of future pandemic events of unknown proportions will likely push up Subcontractors’ margins to cover risk contingencies until things settle down, perceived risks reside, and the new normality arrives – until the next event happens . So prices spike and then level off .

Q: How will remote working impact the demand on the commercial property sector?

A: Working from home has led us to re-evaluate the necessity of commuting to large corporate offices . If remote working does become a significant preference, the demand for prime office space would drop and, consequently, so would commercial rents and capital values . This would also reduce commercial development and traffic congestion .

Natalie Dione Alexander, MSc., PQS, MRICS, LEED-AP

Construction Project Manager

Q: How do you think that health and safety will improve on construction sites in the future?

A: Much of the currently established safety regulations that exist around Health and Safety seem to be mainly focused on reducing deaths and serious injuries of workers through the protocol and guidelines around how tools, machinery, and hazardous materials are handled . I think there will be more consideration around the sanitary conditions and upkeep to ensure that workers do not suffer adverse health effects .

Q: Does your company have a contingency plan for such crises – if so, how successful has this been?

A: Thankfully, yes! Three years ago, my company started the process of implementing ‘Workplace Mobility’ which includes the improvement of technology in the way we communicate and work both in and out of office . This was not planned directly for a crisis, but during this pandemic proved to be quite useful and productive . The senior executives are also compiling staff experiences (positive and negative) to use for future improvement .

Q: Do you see any emerging opportunities coming out of this crisis for Quantity Surveyors?

A: Understandably, this is quite a unique (we hope rare) situation for which I believe not even the best quantity surveyor could have prepared in regards to cost management and contingency planning around such a crisis . I do however believe this is an opportunity for the QS profession to recognize the importance of contract knowledge to offer counsel to our clients . What exactly are the implications and legalities of standard CCDC or owner generated Stipulated Price Contracts around Force Majeure and delay claims?

Edward Traore, MSc, PQS(F), MRICS, PMP

President/CEO, TDI Global Services Synergy Ltd .

Q: What has the COVID-19 crisis meant for you, and/or your business?

A: Unprecedented times call for innovative and bold moves . The spread of COVID-19 has significantly disrupted global businesses, livelihoods, and communities . This crisis has inadvertently motivated our business to embrace collaboration and working remotely through virtual platforms, as well as finding other innovative ways to be productive while maintaining efforts to minimize the impact on employees/ public health and limit disruptions to operations and service delivery .

Q: How are you dealing with working remotely or away from the office?

A: The COVID-19 crisis has created an opportunity to reset our business model on a sustainable footing . By working remotely or away from the office, we have been reminded in the most profound and difficult way why our organisations must be agile and flexible in response to the prevailing business environment .

Q: Will the COVID-19 crisis change how business is carried out in the future?

A: In the aftermath of a significant crisis such as the COVID-19 pandemic, it is an entirely understandable human impulse to expect things to ‘return to normal’ or go back to ‘business as usual’ . Evidently, COVID-19 has unleashed a ravaging impact to the global economy, disrupting supply chains while stifling demand and changing business-operating models . Now, businesses must start thinking strategically on how to adapt to the ‘new normal’ as the pandemic and market environment evolve .

Angela Denice Lai, PQS, FRICS, LEED AP (O+M)

Managing Partner, Core Two

Q: Will the COVID-19 crisis change how business is carried out in the future?

A: There will be a different way of working, established by a forced change in behaviours . I believe that businesses have been enlightened to the opportunities of remote working and economic use of corporate real estate . We have had to change the way we work and we discovered the wonders of technology through virtual platforms, so in-person interaction is less necessary .

Q: How long do you think it will take return to the pre-COVID-19 state after the crisis is over?

A: It will take a while . The general expectation is that there will be a ‘V’ shaped recovery of the economy, but is likely to be more ‘U’ or ‘L’ shaped, with a slow and gradual recovery . Unlike the 2008 financial crisis, this crisis has hit almost every single sector with the exception of virtual platforms and online retail; job losses and tertiary impacts are unprecedented . I believe that the crisis will not be over until a vaccine is developed .

Q: How will remote working impact the demand on the commercial property sector?

A: There may be less demand for commercial property as remote working may become more favoured . Companies have now seen the potential savings in not having designated office space . If staff do return, major adjustments will be needed, such as partitions between staff, extensive cleaning regimes, physical distancing requirements, and elimination of hot-desking that may not be practical, particularly for large organizations . This will again depend on the development of a vaccine .

Bola Abisogun, OBE, PQS, FRICS, MCIOB, PrQS

Founder & Chairman, DiverseCity Surveyors

Q: Will the COVID-19 crisis change how business is carried out in the future?

A: In a constantly evolving profession, the fundamentals of how we conduct business (in the UK) will not return to the delivery model(s) previously deployed . The immediate need of many (if not all) clients operating within and across the London construction sector has been one of supply chain resiliency . It is imperative that we deploy innovative ways of working, whilst seeking to mitigate increasing, and in many cases unquantifiable, project risk .

Q: What do you think the construction sector can learn from the COVID-19 crisis?

A: I have coined a new phrase, ‘NOTHING will be the same and EVERYTHING will be different’; change is inevitable . In addition to the obvious challenges, more than anything else EVERY single business process is likely to be re-engineered in one way or another . For the QS this is a clear opportunity to dissect our own business model(s) and critique both our logic and client-facing outcome(s) .

Q: Do you see any emerging opportunities coming out of this crisis for Quantity Surveyors?

A: The future role (and workflow) of the PQS is about to change and (with the support of Alan Muse at the RICS) I will be charting the likely transition via my new initiative #PQS2030 . The order of the day will be collaborative working and greater use of technological assets in an attempt to render carbon emissions to net-zero, increased operations efficiency and transparency, and designing-out waste, at every opportunity .

Alan Hand, PQS(F)

Senior Partner/CEO, A .W . Hooker Associates Ltd .

Q: What has the COVID-19 crisis meant for you and/or your business?

A: Our firm already had a ‘work from home’ policy in place so this certainly helped . We had many ongoing projects, which were deemed essential so we quickly adapted to working from home and conducting remote meetings . We have found MS Teams to be most suitable and intuitive to collaborate and keep all our staff connected .

Q: Will the COVID-19 crisis change how business is carried out in the future?

A: I believe it is inevitable that the crisis will result in changes . We are already developing policies to help prepare our staff to safely return to working at the office and sites . I think we will see much more teleconferencing and remote collaboration in the future . This may result in less need for office space . The new ‘normal’ will not be the same as the old ‘normal’ by a long stretch .

Q: Do you think that the COVID-19 crisis will encourage innovation in construction?

A: Yes, it will encourage innovation . Offsite prefabrication of more assemblies and components will accelerate as will robotics in construction . Activities which currently require close interaction of multiple construction workers will be adapted with special tools and techniques to minimize working too closely together .

ABOUT THE AUTHOR

Interviews conducted by Arif Ghaffur, PQS(F), Editor of the Construction Economist

Richard Wong Lia Bruschetta

Will COVID-19 change behavior in the construction industry?

A legal perspective

Our industry is facing unprecedented times . COVID-19 has forced every stakeholder in the construction pyramid to adapt to new challenges resulting from a shifting landscape of site closures, weakened supply chains, and intensive health and safety requirements .

Construction may become more expensive, slower as new procedures are followed, and at greater risk for future uncertainties as the effects of COVID-19 continue to evolve – including possible future waves and governmental action .

In this legal corner, we share some of our early insights on how we think parties may approach contracting around

COVID-19 as well as potential behavior in addressing the disputes to come, and that we hope will assist as you navigate concerns, address potential risks to your businesses, and ultimately strategize for the new normal .

Contracting and construction

Clauses: a new normal. COVID-19 has put the spotlight on obvious and obscure clauses alike as parties issue and/or receive claims for money and time impact . We are seeing this have an impact on procurements and contract negotiations, at times involving sureties, as parties consider how most appropriately to address and allocate risks related to COVID-19 given a vaccine is not expected for a year or more, and in light of the risk of a potential “second wave” or another future health risk . Parties and their advisors will need to engage in front-end dialogue on issues such as project structuring, pricing, scheduling, OHSA, changes in law, force majeure, suspension and termination rights, and prudent practices; in our experience, it will be crucial for contracts to be internally consistent, which is not always the case . While some may opt for the status quo, we believe the “new normal” will be parties giving specific thought to clarifying how such impacts are addressed in their suite of contracts and subcontracts .

Innovative means and methods. Even as economies re-start, the current set of supply chain disruptions, labour shortages due to absenteeism, illness or travel restrictions, and new health and safety procedures to accommodate “physical distancing” on projects will persist for some time . We expect contracting parties to respond to this challenge by analyzing existing processes and developing new means and methods to mitigate these risks . The skillsets of quantity surveyors – including cost estimating, forecasting and management – will be particularly crucial to advise in a volatile market . Another trend may be an increase in modular construction methods, which have been successful in hospital construction and residential housing settings . Overall, parties will increasingly value innovative processes and technology to minimize disruption and insulate the design and construction process from COVID-19 .

Andrew Heal J.D., LL.M. Partner Certifi ed Specialist Construction Law

Catherine DiMarco LL.B. Partner Certifi ed Specialist Construction Law

Damon Stoddard LL.B., LL.M. Partner

Assisting clients in the built environment

Solid. Legal. Advice.

www.healandco.com

PHONE: 416.583.5900

Re-examining project models and contract forms. Should an owner change its project delivery model or contract structures based on COVID-19? As quantity surveyors appreciate, it is crucial for owners to be realistic in resetting their budgets, contingencies, and schedules as the construction industry readjusts to the new normal . This exercise includes developing a sense of the marketplace including what risks counterparties are willing to bear or willing to share . For example, if contractors or subcontractors who may be experiencing extraordinary financial pressures are asked to bear an unusual amount of risk, this may result in behavior ranging from not bidding, underbidding and potentially jeopardizing their future financial position, or bidding with significant price and schedule contingencies .

In terms of project delivery models, recent attention in contracting for complex infrastructure has focused on “relational contracting” models such as integrated project delivery, or “IPD” (e .g . CCDC 30 - 2018) and alliancing (introduced this year for the Union Station Enhancement project), which reflect principles of risk-sharing and collaboration to a greater degree than standard design-bid-build or design-build models . Painshare/gainshare mechanisms, “big room” collaborations (for IPD), and other techniques may lower overall costs, create more flexibility and teamwork, and less strategic behavior preparing for disputes or claims .

For private sector projects, pricing structures may move away from fixed-price contracting and become more nuanced possibly involving cost-plus, price adjustment mechanisms, contingency sharing, or incentives (which may also extend to schedule or other metrics) . Regardless of the form of model or contract, owners are well advised during procurement to value strong, experienced, and effective management, greater specificity in the intended means and methods to address COVID-19, and meticulous record-keeping in this challenging environment .

Contentious issues and disputes

Revisiting existing disputes. COVID-19 has led to temporary court closures across the country . While courts are expanding the scope of hearings that may proceed remotely, parties should realistically expect delays in seeking relief from a court now and in the future . Risk profiles have also shifted in light of the pandemic . Many construction companies already felt the strain of cash flow issues, as evidenced in the recent consultations on prompt payment . According to the Canadian Construction Association, 70% of its membership are small and medium-sized businesses, which typically have less operating capital than larger enterprises . Parties may take a hard look at existing disputes against this backdrop in the COVID-19 era and may be more open to resolving disputes and prioritizing getting to completion, as opposed to engaging in behavior that may delay payment and completion . These forces may create new opportunities for settlement .

Post-pandemic disputes. A flood of project disputes relating to delays, cost overruns and other COVID-19 related claims is inevitable . Parties will need, as usual, to prove their claims and demonstrate mitigation efforts and we expect parties will review current record-keeping practices, address gaps, and introduce improvements that will carry over into future projects . Given our earlier comments on drafting to address COVID-19, we will likely see more disputes on the characterization of the impacts of COVID-19 and the proper application of contract provisions relating to changes of law, termination for prolonged suspension, and stop work orders, in addition to the usual force majeure clauses . Parties may look to quantity surveyors to provide credible independent assessments in respect of the status of work on affected projects . We expect parties will also increasingly be drawn to alternative dispute resolution processes like mediation and arbitration, which can proceed remotely and likely offer a timelier resolution than the courts, as well as other benefits like customization and confidentiality .

Embracing adjudication. Ontario has yet to see a significant uptake of adjudication . This may be because only contracts entered into after October 1, 2019, subject to certain grandfathering rules, are subject to the prompt payment and adjudication regime under the Construction Act . It may also be that there is still a lack of familiarity with the process .

Helping your team build for success.

On complex construction and infrastructure projects, your team manages both the expected and unexpected. Osler’s specialized lawyers, many of whom are also engineers, have the industry experience and legal insight to help anticipate challenges and mitigate risks – so you’re prepared for whatever comes up. Contact Richard Wong at rwong@osler.com

Osler, Hoskin & Harcourt llp osler.com

As time goes on, more contracts will become subject to the new regime, and more adjudicators will be added to the roster (note that at the time of writing, about 15% are quantity surveyors) . Contractors may initiate adjudications through a payment application that includes claims for additional costs viewed to be the owner’s responsibility, leading to a notice of dispute from the owner . Given how quickly adjudications proceed and the swift response timelines, owners should remain as prepared as they can be in their documentation and management-readiness . As decisions are only interim, dissatisfied parties may pursue future arbitration or litigation – so legal counsel should be involved from the outset .

About the authors

Richard Wong is a Partner and Chair of the Chambers Band 1-rated Construction & Infrastructure Group at Osler, Hoskin & Harcourt LLP .

Lia Bruschetta is a litigator at Osler, Hoskin & Harcourt LLP whose practice focuses primarily on the resolution of disputes arising out of construction and infrastructure projects .

Did you know?

Prepared by Yasmin Abdiladif, Dip. C.E.T. Assistant to Editor, Construction Economist

Megaprojects are large-scale, complex ventures that typically cost $1 billion or more, take many years to develop and build, involve multiple public and private stakeholders, are transformational, and have impact upon millions of people . Megaprojects are usually measured in billions of dollars, Major Projects in hundreds of millions, and Projects in millions or tens of millions . Megaprojects are sometimes also called ‘Major Programs’ . The table below sets forth the top-20 largescale projects with a calamitous history of cost overruns:

Project

Cost overrun (%)

Suez Canal, Egypt 1900

Scottish Parliament Building, Scotland 1600

Sydney Opera House, Australia 1400

Concord(e) Supersonic Aeroplane, UK, France 1100

Troy and Greenfield Railroad, US 900

Montreal Summer Olympics, Canada 720

Excalibur Smart Projectile, US, Sweden 650

Canadian Firearms Registry, Canada 720

Medicare Transaction System, US 560

National Heath Service IT System, UK 550

Bank of Norway Headquarters, Norway 440

Lake Placid Winter Olympics, US 320

Furka Base Tunnel, Switzerland 300

Verrazano-Narrows Bridge, US 280

Boston’s Big Dig Artery/Tunnel Project, US 220

Denver International Airport, US 200

Minneapolis Hiawatha Light Rail Line, US 190

Humber Bridge, UK 180

Dublin Port Tunnel, Ireland 160

Montreal Metro Laval Extension, Canada 160 The above table has been taken abridged from the Oxford Handbook of Megaproject Management, edited by Bent Flyvbjerg.

Congress postponement and YQS framework update

Shane McKernan, PQS

We have learned that the current pandemic (COVID-19) has prompted authorities to cancel all gatherings and events, including all upcoming (in-person) CIQS events . While we are saddened to learn that the 2020 CIQS Congress will be postponed, we know it is the right move as safety of the membership is a top priority of the CIQS . We understand that CIQS National is working on alternative solutions in the meantime for a virtual AGM, and video teleconferencing platforms for chapter events . We have confirmation from CIQS National that the Congress for 2021 will be hosted in Winnipeg and look forward to preparing an even bigger and better Congress and YQS program .

The YQS committee continues to work on the YQS engagement plan . A teleconference was held at the last national meeting earlier this month, as well as a follow up teleconference planned for June . While we intended to launch this program in-person at the 2020 Congress, we hope to have our program overview completed per the original schedule, and released with details to the membership . Below are our current vision and objectives in our proposed YQS program overview .

Vision

YQS will strengthen the quantity surveying and estimating profession by promoting its value to their peers across Canada while becoming future leaders of the industry .

Objectives

• Professional development • Sustainability of the profession • Networking • Providing resources and support • Providing opportunities for young professionals • Community involvement • Leadership development advocacy We understand that CIQS National is working on additional future programs, such as a student outreach campaign, leadership program, and government outreach campaign . Keep your eyes peeled for CIQS newsletters/e-blasts for updates in the coming months – and stay safe .

“Always turn a negative situation into a positive situation.” - Michael Jordan . Be like Mike!

About the author

Shane McKernan, PQS, is a Project Manager for Landa Global Properties, a property developer based out of Vancouver, BC . With over a decade of experience in the construction sector, Shane’s experience includes cost consulting, project loan monitoring, and project & construction management . Shane has been on the CIQS – BC Board of Directors since 2013, where he joined as the boards first-ever student member and is now the Chapter President . Shane is also an Assistant to Editor for the Construction Economist .