Construction After the Shutdown
Date Posted: July 2, 2020
Posted In: COVID-19 Updates, Ideas,
From RubinBrown’s ViewPoints: We are entering a point where everyone is thinking about getting back to work and leaving our work from home experience. That is a good thing to think about! But what is the most efficient and profitable way to do that while keeping your employees, customers and subcontractors safe?
Here are a few tips to make that happen.
#1 Priority – Communicate
Many construction companies had crews working at project sites during the work-from-home mandates. However, your customers and suppliers may not have been fully staffed – particularly in the back office functions. It is extremely important to be in contact with everyone in your supply chain.
- Your financial team should call (or Zoom) the financial staff of each owner or other contractors you have been working with to evaluate their current condition. You should determine if they have been processing pay apps, have they been in touch with the back office function of the owner, determine their financial state (if possible), etc. The most important determination is whether they are in a position to pay you and in what time frame.
- Your financial team should also be calling your sub-contractors and suppliers. It is important for you to know if your subs have been paying their suppliers. Are your subs and suppliers in a financial position to continue doing business through the next 60 days (May and June)? If they are short on materials or supplies, how will that affect your particular jobs? You need to understand the extent of these risks as soon as possible.
- Check in with your surety bond provider. If your surety has any plans for less flexibility with key financial metrics during these challenging times, its best to get an understanding of those liquidity requirements now so you are not surprised later while bidding a job.
- Stay close to your bank. Many (if not all) of you were working closely with your bank during the PPP loan process. However, that was money guaranteed by the federal government. Loans guaranteed by the bank itself is a different story. It is important to let the bank know what your expected borrowing needs might be over the near term (May, then June, then July). As discussed below, it is important to have a short term outlook during the start-up period. Finally, you might want to consider establishing a secondary banking relationship to ensure access to cash.
- Project timelines could continue to be affected by social distancing guidelines and recommendations (i.e., crew sizes, # of crews allowed to be on site, etc.) for the foreseeable future. This not only adds time but will likely have a dollar impact to each project as well. Communication between the subcontractors, General Contractor, Construction Manager, and Owner/Owner Rep are as imperative as ever.