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MANAGING THE CORONAVIRUS CRISIS AND THE IMPACTS ON CONSTRUCTION & REAL ESTATE

As of February 26, Romania has registered its first Covid-19 case. The number of cases has since been on the rise and the government is constantly adjusting measures taken to control the situation from a medical and economical perspective. At this point, it is becoming clearer that this crisis will have a global health and also economic effect, especially on certain markets, such as tourism and transport. Construction and real estate will also be impacted by the unfolding crisis, although the effects and extent are yet unclear. It is important to remember that this is a developing situation and measures are being taken locally and globally to prevent major impact on the economy.

We have put together a few key elements that must be taken into account to protect ourselves and also ensure the best outcome for our projects, be they under development or in their initial stages.

MAKE INFORMED DECISIONS

It is important to avoid rash decisions in uncertain times. The effects of this global health crisis are still to be ascertained as the situation continues to unfold and more information is made available. The best decisions are always informed decisions, and in such a situation it is best to gather as much data and analyze that data before making a judgement. The more information we have, the better we can predict what to do.

For now, the key word is containment, until the long-term effects can be determined and assessed.

EMPLOYEE SAFETY

Global and local authorities have put together a set of preventive measures everyone can take to maintain their safety and the safety of those around them, such as: good hygiene, social distancing, avoiding touching your face. Management employees have the option of limiting their exposure through using technology to limit face-to-face meetings, by relying more on phones, emails, videoconferences, electronic transmission of documents, video supervision etc. On site visits/meetings should be limited and have a reduced number of participants who will avoid close proximity and physical interaction as much as possible.

The well-being of site workers must be a central concern, since they are the backbone of any construction project. The most important measures that must be taken on site for worker protection are:

- making hygiene products available in designated areas throughout the site (soap, hand sanitizers, paper towels, surface cleaners) and instructing workers on proper use of these products (recommended frequency, amount and duration of hygiene product use)

- providing masks and gloves to workers and site visitors and ensuring proper use

- limiting groups of workers as much as possible, organizing their labor to adapt to health and prevention rules

- instructing workers on maintaining a safe distance from other workers/site visitors

- ensure proper hygiene and distancing measures are taken as regards common areas such as toilets and lunch areas

Other complementary measures may be taken for the safety of workers, such as ensuring centralized transport to avoid exposure to public transport and holding regular information sessions regarding preventive measures.

Anxiety among workers is a major concern in times such as these and keeping workers informed and at ease is equally as important as the other preventive and control measures. Make sure official information is regularly shared and discussed with workers, while maintaining all safety precautions.

ADAPT AND OVERCOME

Despite numbers of registered cases in Romania being low at this time, we must consider the rise in numbers registered globally and understand how this translates into potential effects on the market and on developing projects. Depending on the development of the situation both locally and worldwide, projects may be impacted by:

- labor shortages due to workers being required to be isolated or becoming ill

- materials supply shortages due to China’s containment efforts including the shut-down of factories

- increase in certain material prices due to shortages

- market anxiety affecting financing conditions for developers and contractors

- anxiety affecting buyers

- quarantine and travel bans

For these reasons, it is important to stay informed and only make decisions based on a full analysis of unfolding data, while also avoiding major-impact decisions until the situation becomes more clear.

Change management incorporates organizational tools that can be utilized to help make successful transitions resulting in the adoption and realization of change. Project management tools for change management must be implemented:  

- ensure the right resources are dedicated and mobilized

- check ongoing initiatives before committing to new ones

- monitor market for risks, dependencies

- monitor customer/market needs

Until then, a calm, steady (and safe) pace is the best way to ensure projects are carried out and meet their projected milestones and deadlines as much as possible.

EXTENSION OF DEADLINE AND FORCE MAJEURE

If the effects of the pandemic reach a level that significantly impacts project deadlines and the ability to carry out projects that are under development, there are specific remedies that can be applied. In certain cases, a contractor may request an extension of the project deadline and, for the most severe cases, the law provides specific provisions for dealing with cases of force majeure.

Extensions of deadline may be granted for significand shortages of labor due to general quarantine measures taken by local authorities or closure of construction sites as a preventive measures taken by authorities.

General contractor agreements also mandatorily include Civil Code provisions relating to force majeure, defined as event that is beyond a party's control, could not reasonably have been provided against, could not have reasonably been avoided or overcome and is not attributable to the other party. The contractor must notify the Beneficiary/Project Manager if and whenever it becomes reasonably apparent that the progress of the Works or any Section is being or is likely to be delayed. Measures are then taken to mitigate the risks that follow along such circumstances.

STAY SAFE AND THINK AHEAD  

What is now most important is that we understand and limit the risks associated with this pandemic, doing our best to protect ourselves and other around us by applying the preventive measures recommended by authorities. It is important to stay positive and use this time to assess our overall strengths and weaknesses and plan ahead. As more information becomes available, our decisions will become more clear. The real-estate market typically lags behind the overall economy by 12 to 18 months, so any measures that are taken must have this important aspect as a focal point.

MONDAY, MARCH 16, 2020