The COVID-19 pandemic has upset the North American construction industry in a variety of ways. According to the latest ConstructConnect report, more than 5,000 projects have been delayed across the United States. 2,000 more have been delayed in Canada. Even in places where the pandemic hasn’t rendered construction projects impossible to complete, project owners and construction teams are facing major disruptions and slowdowns.
These disruptions have been particularly painful for public construction. Under normal circumstances, state and local agencies would be conducting road and bridge projects, not to mention upgrading facilities. Schools would be ramping up to renovate classrooms, parking lots and other spaces. But progress on these plans has been stalled in some places and halted in others due to a constellation of challenges.
Key Disruptors Halting Public Construction Work
Owner Uncertainty
Local government agencies have seen dramatic drops in tax revenues and other related revenue sources due to shutdowns. This revenue uncertainty has forced these agencies to delay and cancel previously planned construction projects.
Qualified Workforce Shortages
Some of the most immediate challenges are likely to be felt at the subcontractor level. Small businesses make up the majority of subcontractors, and they are financially vulnerable to project delays and cancellations. For many small construction firms, a month’s worth of delays or the cancellation of multiple projects will be a crushing blow to their operations. Potential COVID-19 outbreaks, which could cause quarantines for skilled labor forces, would also be disastrous in a labor market that is already airtight.
Disruptions in Supply Chains
Quarantines and shutdowns have slowed down manufacturers’ ability to produce everything from millwork to plumbing fixtures. This will affect product availability, drive up costs and eventually have an impact on project completion dates.
Public Health Regulations
Contractors are being required to follow health and safety risk assessments as well as medical and government guidelines. Impacts of these assessments will vary. For example, projects that are done outside in an open environment — like highway and road repairs — may be in a better position to comply with new precautions than projects being done in an enclosed environment.
Overcoming Disruptions to Public Construction with Cooperative Purchasing
This nexus of obstacles is daunting, but project owners can overcome these circumstances using the power of cooperative purchasing. In the April/May 2020 issue of Government Procurement magazine, National Cooperative Procurement Partners Executive Director Tammy Rimes defines cooperative procurement as “the use of solicited, ready-to-go contracts established by a government agency or cooperative organization.”
Chad Coauette, Executive Director/CEO of Sourcewell, a national purchasing cooperative with more than 50,000 members, identifies three benefits of buying construction services through a co-op. “First, we help create a level of process efficiency for our members in that we can hold manufacturers contracts on their behalf. Beyond that efficiency, we aggregate member demand for services, which garners great pricing from our vendor partners. I would say efficiency, aggregation of demand and great pricing — those are the areas where cooperatives add the most value.” These benefits apply whether an agency is buying office furniture or construction services.
Great pricing is an effective tool for agencies who need facilities alterations in order to safely re-open. Many agencies, for instance, may need to erect barriers or install plexiglass partitions to enforce social distancing guidelines. These are projects they did not budget for when 2020 began but are now high priority. Working with a cooperative purchasing network can provide cost certainty for construction work.
Then there’s the matter of accessing quality contractors. Many cooperative networks carry ezIQC® contracts to help their members procure construction services from local contractors. An alternative to traditional construction project delivery, ezIQC allows members to use the same contract for multiple projects. Tony Glenz, Sourcewell Contract Administration Supervisor, explains, “Sourcewell ezIQC contracts streamline public construction procurement and provide local, competitively bid prices upfront. This eliminates the need to bid each project. From repairs and renovations to new construction, an agency can access competitively awarded contractors who can begin right away. The agency can also avoid red tape and issue POs in days instead of weeks or months — while still satisfying local competitive bidding requirements.”
According to Lynn Sadosky, Director of Public Works for the Town of North Haven Connecticut, accessing qualified, local contractors is an enormous benefit. “Having a reliable, affordable and communicative contractor you can trust makes all the difference. Using cooperative purchasing networks saves us time and provides us peace of mind by vetting contractors.” This same sentiment was echoed by Terry Lusby, Jr., Facilities and Fleet Superintendent for the Village of Tinley Park in Illinois. According to him, vetted quality contractors are the primary reason the village uses ezIQC.
Public Construction’s “New Normal”
The full effect of COVID-19 will not be known for some time, but the sudden economic shock it has created is unprecedented. Its impact will be felt well into the future. Limiting the pandemic’s disruption to public construction projects will require cooperation among key stakeholders. Owners and contractors will need to create a working environment that allows open dialogue and honest discussions on project expectations and progress. Candid conversations surrounding a healthy work environment, supply chain slowdowns, owner uncertainty and the risk of qualified workforce shortages will be essential to minimizing project disruptions.
We’re all in this together. Just as in other aspects of life, recovery from COVID-19 will require an environment of collaboration, understanding and patience in the public construction sphere. It will be difficult. It will be challenging. But it will be worth it.
