Property Australia

Navigating the new normal

PROPERTY AUSTRALIA June 30, 2020

COVID-19 is already creating delays, disruptions and cost overruns on construction sites around Australia. SJA’s Steve Abbott and Ben Mackey have advice for both principals and contractors navigating this new normal.

“Time and costs today are very different to what they were just a few months ago,” says SJA’s managing director Steve Abbott.

“We are already seeing significant impacts on construction projects of all sizes. Productivity is down and that means projects will take longer and costs will be higher.”

SJA works across the full construction cycle. Its advisory service division is already helping clients to work through COVID-19 delays or cost overruns. SJA also offers planning, programming, quantity surveying and project managements services.

“There are certainly senior estimators with sweat on the brow as they try to put a new price on projects.”

Meeting new workplace health and safety obligations on site come at a cost, Abbott explains. The immediate impact of social distancing on multi-storey projects has meant “some teams are taking hours to get on site because there are a limited number of hoists”.

Dealing with COVID-19 infections on site is another challenge with cost implications. Abbott points to two separate shutdowns on a major infrastructure project as just one example.

“You can plan for social distancing requirements and the impact on productivity rates. But you don’t know when you’ll end up with an infection on site – so it’s part guesswork,” adds SJA’s general manager Ben Mackey.

Contractors are grappling with the challenges on current projects but must also consider productivity rates when tendering for new work, Mackey says.

Interrogating programs and tenders with a COVID-19 lens “is a new skill,” Mackey adds.

Then there’s the legal ramifications. “Contractors and principals operate under workplace health and safety obligations so they need to consider accommodating social distancing”.

Both principals and contractors must look at their projects “with a fresh set of eyes,” Abbott adds.

“Contractors need to be clear about allowances so that principals can make informed decisions and manage risk. And principals can make a constructive contribution by understanding the allowances made in contracts.”

The contractors best positioned to mitigate risks are those that “put a lot of work into the front end of projects, with smart planning and smart programming,” Mackey adds.

The bottom line is clear. “We can’t apply the rates we have for decades. We need to consider this new normal – because the indicators are it will be with us for a while,” Abbott concludes.

With a multinational network and a track record spanning 20 years, SJA is a leading advisory and delivery services firm specialising in expert and advisory services, planning and programming, project management and quantity surveying. Find out more about SJA.