COVID-19 IMPACT ON CONSTRUCTION IN-DIRECT COSTS:

Around the world this construction category is known as Field In-Directs, General Conditions, CSI-Division 1 & Preliminaries / General Requirements: the cost of this category can range anywhere from as low as 7% to more than 35% and even more in some situations of a projects final cost, so from an estimating point of view it’s important cost category to accurately account for.

Lots of Estimators have historically used a percentage of the direct construction costs (using 10% - 20% of the direct construction cost is a common practice in our industry) to come up with this value, I believe this is the wrong way to go and can lead to errors, losing out on bids, cost overruns or other problems, especially in today’s environment now that we are dealing with COVID-19 problems.

On a typical industrial construction project, the loss of productivity due to social distancing, smaller work crews, the continuous wearing of PP & cleaning routines will result in additional direct field construction hours, that will in turn translate into additional construction in-direct hours & cost, for example an industrial construction project that pre-COVID required 100,000 direct man-hours to complete the scope of work, may now require 110,000 to 125,000 direct man-hours to complete due to the COVID-19 mitigation actions that are required.

The impact of COVID-19 will result in additional costs for the following Construction In-Direct line items, especially on Industrial type construction projects.

A.   Extra cost of COVID compliance, hiring addition site safety staff to check worker social distancing compliance & daily temperature checks at the sites entrance gate.

B.   Longer construction durations, means plant hire, construction equipment & site establishment facilities will be at site for longer periods of time.

C.   The additional cost of masks, gloves, safety glasses, hand sanitizer dispensers & sterilizer fluids can be a sizeable cost.

D.   The need for additional site offices to accommodate site staff and the social distancing 6 foot or 2 Meters distancing requirements.

E.   The requirement of additional worker changing rooms & lunch areas to accommodate social distancing measures

F.   Additional cool down breaks due to wearing PP on a continuing basis.

G.  The need for more buses & vans to transport the workforce from worker parking areas / other pickup locations to the actual physical site location.

H.  Dedicated cleaning crew(s) & the need for “clean” temporary warehouse(s) / storage areas.

I.     Possible 14 day quarantining periods for importing out of state / country construction workers, this includes air fare / transportation, accommodation, meals and per diems (I have heard of this situation in Alaska and in the Middle East).

For this article CONSTRUCTION IN-DIRECT COSTS are activities / cost items that will not be a part of the completed project, they are temporary and only serve as a support to the construction activity.

TYPICAL CONSTRUCTION IN-DIRECT COST ITEMS:

·    Construction Supervision, working Foremen & Gangers.

·    Temporary site offices, trailers, porta-cabins, porta johns, janitors, maintenance shop & temporary warehouses.

·    Construction Equipment, backhoes, welding machines, hoists, heavy lift cranes, including mob / demobilization, fuel, lubricants, repairs & maintenance.

·    Temporary power, water, gas & trash removal.

·    Consumables (bottled gases / welding rods) small tools (picks, shovels, saw blades, etc.,), safety items (hard hats, masks, gloves, yellow / lime / orange safety vests & glasses etc.,), nets, signs & hand sanitizer dispensers.

·    Site office computers, printers, telephones & copy machines.

·    Onsite concrete batching plant (mob & demob) c/w with ready mix concrete trucks.

·    Temporary access road(s) (install, maintain & remove), concrete wash-down area & laydown areas.

·    Costs related to project staff mobilization / demobilization, per diems for staff & workers (travelers).

·    Temporary pipe fabrication shop & shop welding equipment & forklifts.

·    T1 line or similar carrier communications systems / satellite systems.

·    Tool room & material barcoding systems.

·    Establishment of temporary worker camp accommodation, housekeeping & catering services.

·    Temporary parking areas, gates & temporary fencing to storage / laydown areas.

·    Field office furniture & miscellaneous office supplies & site entrance swipe badges.

·    Site travel, relocation costs & temporary living expenses.

·    Provision of lunch tents & seating areas.

·    COVID compliance / monitoring site staff.

·    Temperature check stations & temperature check instruments.

·     Security / Watchman services & CCTV systems.

·      Scaffolding, temporary barriers & site entrance gates / turnstiles.

·      Field materials distribution equipment, temporary heat, snow removal & water dispensers for workers.

·      First aid equipment, vans, buses & Superintendents trucks.

·      Setting out, surveys, batter boards & layout work.

·      Construction worker weather protection clothing.

·      Temporary traffic lights, barricades, safety nets, tarpaulins & site related signs.

·      Concrete testing, ND testing site lab & staff.

·      Progress photographs & videos.

Our initial assessment is that Commercial type construction (offices, single family housing, apartments, shopping malls & the like) In-Directs costs mentioned above could increase by 0% to 10% in the new normal COVID-19 construction environment. The Owners of these facilities appear to be somewhat less concerned with the COVID-19 virus than Industrial Owners.

Industrial construction In-Direct costs (which are typically in the region of 25% to 40% of the direct construction cost) may possibly increase by an additional 10% to 35% due to the COVID-19 mitigation procedures / construction work guidelines imposed on construction companies by Owner organizations (Major Oil / Gas, Manufacturing & Pharmaceutical companies) these companies are extremely cognizant of problems the COVID-19 virus could cause to their ongoing production operations, that in the worst situation could include shutting operations down, if infections are encountered. Of course each construction project is unique, so these ranges will vary on the complexity of each project.

If you have any questions, comments or feedback on this article contact John G. McConville CCP - Operations Director Telephone (609) 577 4505 Private E Mail [email protected]

To review Compass International’s Global Construction publications click on the following link. www.compassinternational.net/books/ or our Estimate Validation / Cost Saving Consulting / Web Based Training services click on the following link www.compassinternational.net/