CoreNet Plugged In: COVID-19 Shutdown: What We’ve Learned and What’s Next
Tommy O’Halloran, Vice President, Business Development, Structure Tone
Mindy Williams-McElearney, Vice President, Client Services, L&K Partners
Scott Corneby, Executive Vice President, Structure Tone
Marc D. Chiapperino, Managing Director and Partner, VVA Project & Cost Managers
Buzz Riley, Managing Director and Principal, IA Interior Architects
Jaime Fuertes, Managing Director, Global Head of Corporate Services, Apollo Global Management
The second installment of the CoreNet PluggedIn series provided an in-depth look at New York’s construction shutdown and the city’s response to the growing concerns around COVID-19. On Friday, March 27, Governor Andrew Cuomo announced that all nonessential construction would end immediately. Essential construction includes work on infrastructure, hospitals, affordable housing, and emergency repairs.
In response to this news, CoreNet PluggedIn hosted a panel of professionals from several different stages of a project lifecycle to share what they have learned from their experiences dealing with the crisis, how they believe the industry will sustain and move forward, and how approaches to construction and office design may be changed forever.
The conversation was organized and led by Thomas O’Halloran of Structure Tone and Mindy Williams-McElearney of L&K Partners, and featured Scott Corneby of Structure Tone, Marc Chiapperino of VVA, Buzz Riley of IA Interior Architects, and Jaime Fuertes of Apollo Global Management.
The COVID-19 Overview: “Where we are in New York and how we got to where we are today” – Scott Corneby
As an Executive Vice President at a leading construction company in New York City, Scott Corneby monitored the spread of COVID-19 and its impact on job sites very closely. In the first few weeks of the outbreak around March 9 to March 16, construction had been deemed essential, and contractors continued working normally with some extra precautions like taking workers’ temperatures and paying close attention to any potential symptoms exhibited by staff. Initially, Corneby explains “there seemed to be unanimous support to keep our industry up and running,” from associations like REBNY, trade unions, and general contractors. According to Corneby, “everyone went out to work like business as usual.”
However, within a few days of construction being deemed essential, problems started to arise quickly. Construction sites would be temporarily shut down for sanitizing while affected staff would be placed in mandatory 14-day quarantine. The pressure of project deadlines and the lack of productivity on site created friction between the general contractors and the sub-trades.
Additionally, supply chain issues arose as warehouses shut down or utilized skeleton crews and practiced social distancing. Some materials had been ordered from overseas countries who had closed their borders or stopped all production completely, such as Italy, Germany, and Canada.
At one point, Corneby estimates that activity was down 50-60% and the industry associations took notice. The workforce rallied together and began lobbying and campaigning for a stricter definition of essential construction, and finally on March 27, Governor Cuomo issued the mandate that shut down most of these job sites.
The Shutdown: “Now we’re all [working] from home primarily, and we’ll see what the new environment brings us” – Scott Corneby
To paint a picture of the situation on construction sites, Marc Chiapperino of VVA Project Managers shared his statistics from the days just before the Governor’s final shutdown occurred:
- 5% of sites were closed down due to infected workers with plans to re-open days later
- 1-2% of projects were cancelled by the client with indeterminate outcome
- 10% on limited hold
- Remaining projects were all continuing, but with a deterioration of manpower
Many people predicted the shutdown days before it happened and began preparing their staff and clients for the inevitable reality of working from home. All the speakers agreed that there are many ways to take advantage of the downtime and continue to advance projects in other ways.
Chiapperino points out that shop drawings can be circulated, submittals can be approved, RFIs can be issued and responses submitted. Specifically, Chiapperino suggests that this is “a great time to bid projects. . . estimators are engaged and connected and market will be competitive.”
As an architect focusing on commercial interiors, Buzz Riley explains that his ability to do his work is minimally impacted by staying home, as “technology has made all the difference in the world.” It is easy to connect with partners and consultants over video conferences and even present projects or bids virtually. Riley has also used Facetime and video chats to answer questions from the field. Riley explains that “people are adapting and being very patient with each other.”
As an example of adaptation to COVID life, Jaime Fuertes explains that Apollo Global is still adjusting to the new world of working from home. As a company that did not have a culture of working remotely prior to the shelter-in-place order, Fuertes says “we’re finding out very quickly how to be productive and operate effectively while working from home in spite of everyone’s different challenges”.
The Reality and Consequences: “Clients are going to be [wondering] ‘what’s my new timeline?’ It’s going to take some time to figure that out and give a straight answer” – Scott Corneby
To provide insight as a client with several active projects around the world, Fuertes explained what his biggest concerns are now that construction is shut down. He recognizes that delays impact their bottom line, and he will be asking questions like “what’s my new schedule?” and “what’s happening with all my products?”
There is no doubt among any of these panelists that project timelines will be impacted. Chiapperino warns that “people should be assessing the risks to their projects based on the changing timelines and also the cost implications. Make no mistake, there will be cost implications to every project.”
Fuertes also worries about the “domino effect” that project delays have on the entire real estate industry. As tenants explore holdover possibilities and Force Majeure clauses with construction contracts and leases, landlords will be unable to provide the spaces they promised to the next tenants. The consequences of one project going on hold will have an impact on several other parties.
The panelists also recognized that when the ban is lifted, it will not be as simple as flipping a switch back to business-as-usual. There will be a number of inefficiencies and obstacles to re-starting projects. Lack of manpower is still a concern, especially when coupled with potential new social distancing protocols that may be in effect. Supply chain issues will still exist; parts and pieces come from other states and other countries all with their own sets of circumstances. Corneby explains, “it’s going to be a mad dash to the starting line . . . but they’re not all going to open up the floodgates on the same day.” All panelists agree that the return to normalcy will be gradual and phased.
Chiapperino is more hopeful that despite these challenges, there are many ways to make up for lost time. “A 4-week delay of construction may only have to be a 2-week delay to the overall timeline if clients are willing to consider paying for some premium time.”
The Future of Office Design and Construction Practices post-COVID-19: “There’s a lot of questions; there’s a lot of conversations that are happening.” – Buzz Riley
The COVID-19 outbreak will leave a lasting impression in the way we design office space. The panelists agree that there will be many implications for how offices are designed in the future, from new sanitation protocols to a re-imagining of the open office. While nothing is certain yet, the audience and panelists shared their predictions.
Some people believe that the widespread working from home policies may motivate companies to lower their real estate footprint, decreasing their scope on current projects, and potentially requiring an open office plan. Fuertes admitted that while his company has been working successfully from home, long-term future requirements remain an unknown, but he will not be adjusting any of his real estate needs in response to this crisis any time soon. Riley considers the ability to work from home as an “enhanced” way of working.” Overall, technology has been very effective, but many companies want to maintain their culture and do not foresee abandoning the office environment.
In terms of how to design spaces in a post-COVID world, Fuertes believes that “this may actually bring the opposite of the open floor environment.” The panelists also agree that workers may feel safer with more distance between each other, and designers will be tasked to find creative solutions to this issue. New precautions will be put in place either way, from hand washing stations to touch-free doors as some examples.
Similarly, construction sites may also require new procedures and protocols. Contractors will have to pay special attention to sanitary conditions. There will be an increased emphasis on requiring workers to wear personal protective equipment. Social distancing will remain in effect, and Chiapperino predicts that “the way that we work on the job site is going to change, and it’s going to be somewhat inefficient at the start.”
To address social distancing, Corneby foresees the trades staggering their start time. For example, the mechanical crew will arrive at 6:00 am and then the carpenters will start at 7:00 am, and so forth. This proposed solution would create distance on elevators when crews arrive and depart at different times. They would also take lunch in compliance with their staggered start, so people will not be gathered in such large groups during the break. The schedule will make for longer days for general contractors and clients, potentially adding to the general fees and conditions of original contracts, but it is one example of what the world of construction may look like in the future.
The panel discussion was attended by 156 guests. The conversation was lively, and there are many ideas within the community about how the design and construction world will be impacted by the lasting effects of the pandemic. Be sure to stay up-to-date with CoreNet’s PluggedIn series to join the webinars, share your voice, and listen to our industry leaders discuss the possibilities. An event will be held every Wednesday at 12:30 pm.
Click here to watch our Virtual Event Recording