The Impact of COVID-19 on the Construction Industry and Contractors
The construction industry faces a host of challenges, but few things have caused as many problems as the COVID-19 pandemic. The arrival of the pandemic changed things for everyone. Most companies weren't prepared, and it caused a serious panic as contractors realized they needed to change the way they did business.
Even more troubling is the fact that they had to make these changes essentially overnight. Below, we will be looking at several of the biggest ways the pandemic has caused an impact that's still being felt.
Projects Were Delayed
COVID caused a host of delays to all manner of projects from subdivisions to condos,
apartment complexes, large commercial properties, and everything in between. Delays
are still occurring today, and they can affect contractors in a couple of ways.
Projects will typically have detailed insurance policies, and the coverage ends on a certain date‐ the completion date. However, if the date arrives and the project isn't complete because of delays, contractors need to negotiate with their insurance carrier to extend coverage. If they can't, they will need to get a new policy.
Also, there is the danger of certain clauses in those contracts that could penalize contractors for a late project. Even though it might've been due to COVID, contractors may have to pay penalties to their clients on late projects.
There Are Labor Shortages
Over the past couple of years, the construction industry has had to deal with labor
shortages. Some people are getting out of the industry entirely, while others retired
early. To help meet the demand, construction companies have found that they need to
offer higher wages to attract good talent. This means that the overall costs of operation
are much higher now.
Problems with the Supply Chain
Lockdowns and slowdowns happened all around the world and to all types of industries.
Factories were shuttered for months at a time, or longer. Materials weren't
manufactured, which meant there was a backlog of work that needed to be completed.
Getting the materials needed started to take a lot longer, and this is still a problem in
some cases. Of course, this also helped lead to the next issue.
The Cost of Materials Has Risen
Given all of the issues with the supply chain issues, it was only natural that the price of
materials would start to rise. The cost is higher than when those contracts were initially
negotiated, but construction companies still need to try to honor those contracts and
cover the higher expenses. They can also try to renegotiate their contracts, but this is
not always possible.
These are just some of the major ways the pandemic has affected contractors and the construction industry. Although things are slowly starting to return to some semblance of normal, these issues are still going to cause problems for some time. It is more important than ever for construction companies to start to find ways to safeguard from these and other issues. Be prepared for anything that happens next.
With rising costs and expenses, it becomes more important than ever to protect your receivables as a construction company. With Nationwide Notice, Inc., you have more control over the lien filing process to protect your right to receive payment. Rules for filing a lien differ depending on the state where you operate. A construction lien is a tool that helps to protect professionals in the construction industry from the risk of non-payment for work performed. As a full and self-service notice and lien company, Nationwide Notice, Inc's priority is to assist our clients to secure their payments. Check out our full list of services on this page - or for more information about how lien filing software can benefit you, contact Nationwide Notice, Inc. to discuss what we can do to help you protect your receivables.