New Report Breaks Down Construction Costs, Innovations Spurred by Pandemic

According to a new white paper published by Hoar Construction, new safety protocols and schedule adjustments spurred by the pandemic can cost an active project 2% of time every day per capita on a work site w/ 300 employees—that’s approximately 12 minutes of a 10-hour workday based off one construction site managed by Hoar in Charlotte, North Carolina.

Although this estimate does not reflect actual cumulative time losses for that project or any other project, cumulative effects threaten to derail many projects, leading to the increase of tactics, such as pull planning for budget-conscious owners and developers who are tightening their belts as financing and the overall pipeline for new projects continues to dry up.

Titled “The COVID Effect,” the white paper details how the pandemic has impacted specific CRE market sectors, material procurement and budgets, along with how the authors anticipate the industry to adapt and be impacted over the next year.

Among the key findings:

• New health protocols and cleaning measures (masks, hand sanitizers, disinfectants) account for the largest new cost since the onset of the pandemic in March, outranking other expenses associated with material delays and decreased productivity. Most contracts signed before COVID reached the U.S. don’t include clear language on who is responsible for those costs, with many contractors choosing to split the tab with clients.
• Labor costs are decreasing as most subcontractors no longer have a stable backlog of projects. With more firms jumping in and more competitive pricing on new RFPs, some markets are seeing an incremental decrease in the overall cost of construction despite recent price hikes for lumber and other building materials.

Increased efficiencies and innovation continue to mushroom in the field. Examples include a healthcare project that recently held a 100% virtual final AHCA inspection, and work crews recording safety messages and playing them on mounted TVs to replace in-person group safety meetings. Hoar says they’re also seeing innovation happening across market sectors as they work with retail owners looking to convert their stores to last-mile distribution centers, hoteliers who seek to transform their properties into apartments, and hospitals building new flexible space that can quickly morph into patient rooms or ICU beds in anticipation of future surges.

To view the white paper, visit https://hoar.com/the-covid-effect-how-our-industry-stays-resilient-to-keep-building/.