Construction cranes

Advancing Capital Projects During COVID-19

by Olivia MacAngus | April 14, 2020

The impact of COVID-19 is unprecedented and constantly evolving. With health and safety the immediate priority, organizations across Canada are adjusting to new work models and implementing business continuity plans. Recognizing that the situation is temporary, it’s unclear how long physical distancing and other mitigation measures will be required. It could be several more weeks, or even months.

In spite of the challenges COVID-19 presents, many capital projects must continue. Public infrastructure, such as repair work to bridges, watermains and roadways, school lifecycle investments and many other assets, remain key to our future economic recovery and the delivery of public services. In our healthcare sector, the pandemic response must be supported by the rapid completion of ward reconstructions, hospital extensions and similar work. A majority of provinces and territories continue to identify certain types of construction – such as critical infrastructure, transit, energy and industrial projects – as an essential service, including British Columbia, Alberta, Ontario and Quebec.

Even in cases where capital projects can be temporarily paused, there will be pressure to get them completed eventually. Here are some practical considerations to help keep your projects moving forward during this period.

Site inspections and permits

With the adoption of physical distancing policies by most municipalities in Canada, it is increasingly difficult to obtain building permits and arrange site inspections. This disruption is a risk to the commencement and progression of construction projects. Many municipalities have enabled online permit applications. Some municipalities have created alternative inspection procedures, where a project professional can submit site photos or videos for review in lieu of a direct inspection. Owners should expect their project teams to find creative opportunities to keep their project moving through the permitting and inspections processes.

Claims management

In light of COVID-19, owners will also need to prepare to manage construction claims. Many of our clients have received notice of claims or potential claims for the occurrence of events that are beyond the control of the contractor. The actual claims will not be received for some time as delays are ongoing, and the claim cannot be submitted until it is quantified. This gives owners an opportunity to prepare for those claims. Preparation could include getting legal advice on how specific contracts address this type of claim, and it should include getting documents in order and keeping evidence of the actual dates of impact and notification. Taking these steps now will help owners minimize the impact of any claims.

Risk assessments

Whether your project is currently underway or still in the planning phases, now is a good time to conduct risk management workshops. Owners should bring together their internal team and business partners to review their capital projects. They should take the time to identify and quantify new risks that may arise in each project, looking specifically for COVID-19 related risks such as:

  • potential changes in labour availability and productivity;
  • supply chain disruptions that delay delivery or increase the cost of materials;
  • claims for lost time;
  • claims for the increased cost of security or material storage;
  • claims for suspension and re-start costs; and
  • default of subtrades that do not survive the economic slow-down.

For all new and previously identified risks, teams should assess the likelihood of risks occurring and the impact if they do occur. Mitigation measures should be planned for each risk and, where possible, a Plan B should be identified. This depth of analysis will leave project teams better prepared and more agile when work resumes.

Planning and design

In recent years, many projects have been fast-tracked through the planning phase. Where these projects have not been tendered yet, a delay opens a window for owners to conduct additional planning and design. This could include bid document reviews, site investigations for utility locations and relocations, site condition assessments, early works, and coordination activities to reduce risk during delivery. Advancing business cases and design work for pre-construction projects enables owners to get their projects in good shape for stimulus funding and out for bidding earlier. It also allows them to develop a more robust design package with reduced risk of extra costs.

Asset management

In the same vein, in jurisdictions where construction slows or is temporarily halted, owners can take advantage of the time to shift gears and focus on their asset management plans. Many of the ministries and municipalities we work with are required to submit asset management plans as part of their own capital planning and/or to respond to provincial requirements. Much of this work can be done remotely with the use of technology, enabling these clients to catch up on their backlogs and get better visibility on their capital and lifecycle expenditures going forward.

Stimulus funding

Looking to the future, we can anticipate a large spike in procurements once federal and provincial economic stimulus funding starts to flow. Owners can manage that wave of activity by doing what’s possible to ensure that projects currently underway continue, rather than adding to the later volume of projects.

In addition, many of our clients are beginning to prepare their lists of new capital projects now, including projects that are in the pipeline, but currently unfunded or planned for one, two or three years out. They are preparing all of their business case documentation, as well as any initial planning work required, to achieve approvals and funding.

This advance work ensures that these projects will be shovel-ready when the stimulus packages become available, putting owners in an ideal position to secure funding and get new infrastructure built much faster than anticipated. Taking a broader perspective, it also ensures that the stimulus funding works as it should – creating new employment opportunities for thousands of workers and injecting businesses of all sizes with renewed revenue streams.

Planning for the future

In the span of mere weeks, COVID-19 has forced governments and organizations across Canada and around the world into a period of rapid and continual adjustment. Despite this, we can see project planning and management happening coast to coast to help get our economy up and running again quickly. The recommendations above are just some of the things capital project owners can do now to set themselves up for success in the months to come, and to benefit all of us nationwide.