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New safety measures to increase project costs: OCS survey

Angela Gismondi
New safety measures to increase project costs: OCS survey

A recent survey by the Ontario Construction Secretariat (OCS) reports health and safety remains a top concern for ICI contractors, but with the recovery now underway in the province, new challenges are emerging that impact cost and productivity.

The Coronavirus Contractors Survey 2: Restart and Recovery was released at the end of May. It is the second in a series of independent surveys conducted by the OCS between May 11 and May 15. About 203 union and non-union small, medium and large ICI firms were surveyed from across Ontario.

“We wanted to see what the chief concerns were of contractors, what the priorities were and what the issues were,” said Robert Bronk, CEO of OCS. “We also wanted to determine what the economic impact would be…and if there are measures that the government can do to assist. Hopefully we’re providing some information that is useful to the industry that people can look at and maybe help to make decisions, anticipate something coming down the road or influence government policy.”

The survey found the top five contractor concerns are ensuring health and safety of workers and staff; maintaining productivity while meeting physical distancing requirements; quick approval of shovel-ready projects; demand for construction and investment in construction; and project cost overruns due to sanitation, safety and social distancing protocols.

Contractors expect PPE and physical distancing requirements to increase project costs by 23 per cent on average and 39 per cent expect physical distancing to have a high impact on project completion times.

 

At the end of the day, it might actually increase productivity for those contractors who are progressive

— Robert Bronk

Ontario Construction Secretariat

 

“That’s quite significant and it’s going to have an impact going up the chain to owners and purchasers of construction,” explained Bronk. “They are going to have to look at what they have been budgeting for various projects and perhaps increase their budgets too. Right now, the contractor has been absorbing all these costs which were not factored into their bid prices.”

Bronk said he was pleased that health and safety remains a top priority for the contractors surveyed.

“The employers are truly concerned about their employees and that showed in both surveys,” said Bronk, adding he is curious what impact this will have on injuries on sites.

“Since this started health and safety has been on the forefront of peoples’ minds when they are going to work. They’re focused on it and it will be really interesting to see if the injury rates have gone down.”

Although many contractors are concerned about productivity, he wonders if these new protocols may actually make sites more efficient.

“You have to be more intentional on who is where and when and that means better or improved project management and planning,” said Bronk. “At the end of the day it might actually increase productivity for those contractors who are progressive and see this opportunity.”

In terms of the financial impact of coronavirus on the construction industry, the survey found nearly three-quarters (73 per cent) of firms expect less revenue in 2020 than last year and annual revenue is expected to decline by 26 per cent on average.

Seventeen per cent of contractors doubt that they will be able to survive over the long term and nine per cent of firms are considering mergers/acquisitions to stay alive. Forty per cent of firms say they will need government support to stay in business. That number was 56 per cent in the first survey.

“There may need to be some discussions with the appropriate government organizations whether that’s federal or provincial or both in addressing that situation,” Bronk said.

According to the survey, more than six in 10 contractors are still reporting the pandemic is causing medium to high impact on the supply chain, leaving 62 per cent of contractors planning to source more material locally or domestically.

“There could be a crunch in the fall in terms of cash flow,” Bronk noted. “When you start a new project you generally don’t get paid for 60 days, but now you haven’t worked in two months… so even though there might be new projects starting, there might be cash flow issues with contractors because the money is coming down the road.”

Eighty-six per cent of firms surveyed have capacity to take on new shovel-ready projects, but 35 per cent expect it to take at least six months to get back to business-as-usual.

Innovation is really important during times like this, said Bronk, adding the often-used lowest bid procurement method needs to change. He recommended the Qualifications Based Selection method where price is a factor but so is innovation and experience.

“With lowest bid, you’ve shaved your profit margin down to the bare minimum so you can’t do something innovative because if it doesn’t work your profit margin is gone,” said Bronk.

“You’re going to have to allow for firms to innovate and say ‘this is the new normal how can we adjust.’ They need to be able to experiment and try something new.”

 

Follow the author on Twitter @DCN_Angela.

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