Article
COVID-era Construction Is Taking Longer and Costing More
February 2, 2021 3 Minute Read
COVID has left much of the Canadian construction industry in turmoil.
The severity of the situation differs by province. While some are forging ahead with few construction delays, the nation’s two largest provinces, Ontario and Quebec, have been hit hard, with construction all but completely shut down at the moment save for those projects deemed essential.
Regardless of current construction activity levels, the pandemic has created major scheduling inefficiencies across the board, largely due to new site safety measures and COVID protocols that reduce worker densities on construction sites. Getting both labour and materials into commercial office towers through freight and construction elevators and into an active construction site has never been harder.
The challenge is being compounded by an erratic global supply chain. “You’ve got products and materials being imported from around the world and the shipping and production times are all over the place,” says Ron Armstrong, CBRE’s new divisional leader for Advisory Project Management in Canada. “The bottom line is that construction is taking longer and costing more than it did before COVID.”
And when things begin to ramp back up in Ontario and Quebec, Armstrong says construction companies have no choice but to re-coordinate the remaining site work and validate all of their outstanding product and material orders to truly understand where their project sits within the supply chain.
“This is more difficult than it sounds. We learned when the first shutdown ended last May that product manufacturers struggled for weeks to confirm new delivery dates. So a five-week mandatory shutdown doesn’t mean just a five-week schedule delay over and above. Depending on how close you were to substantial completion, the net delay could be quite a bit longer than that once the true impact is felt.”
It’s never been more vital for occupier and investor clients to have a clear line of sight on construction costs and timelines, and Armstrong’s national team—90-plus project management specialists working from coast to coast in the different commercial real estate asset classes, overseeing upwards of $3 billion in managed client spend a year—boasts industry-leading insights and intelligence that gives CBRE clients a competitive advantage and peace of mind in uncertain times.
“Our cost consultancy division is constantly tracking escalations and closely monitoring how the market is responding,” Armstrong says. “Our project directors are in regular communication with the construction industry to understand the scheduling impacts and the logistical challenges each building is having. You need someone tracking things on a building by building basis to truly know what’s happening, be responsive and mitigate schedule impacts.”
By tracking costs so closely, Armstrong’s team gains better insights and can more accurately forecast costs for clients who may have signed a lease but haven’t started their build out yet, or who are mid-project and having difficulty getting across the finish line to achieve their budget. “We’ve definitely seen an increase in claims for additional costs from the sub-trades, some of which are legitimate while others that have no factual base. Our cost consultancy division has been busy helping our clients understand and negotiate these costs to a reasonable number.”
These insights are enhanced further with real-time intelligence from CBRE Research on how much sublet space is hitting the market and the amount of new-build construction happening. “Combining all of that data gives us a comprehensive perception of exactly how the marketplace is responding and how our clients can best move forward,” says Armstrong.
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