Thompson Builders of Novato California compiles litigation data for the building industry. In the following, the company reports how various factors resulting from the pandemic have contributed to the changing landscape of the construction world.
The Pandemic vs. The Construction Industry
It's safe to say that the COVID-19 pandemic threw challenge after challenge at everybody. And its effects were (and are)
harshly felt in the construction industry. From unexpected month-long delays and steadily increasing supply costs, everything and anything seemed to go wrong.
Numerous suppliers, builders, and contractors have been affected for so many reasons. Some of which, the Thompson Builders Litigation blog notes, are more threatening than others.
Ever-Increasing Supply Costs
The material costs are increasing at a rapid rate. Not only does this shoot the price up for contractors. But self-employed builders and renovators have to up their prices to cope with the sky-high costs and still make a profit.
COVID-19 saw a decline in the supply of necessary building materials, so much so that builders and contractors alike have to
turn to alternative suppliers and hunt for worthy substitutes. Unfortunately, the incredibly high new housing demand has not helped the rush to find other solutions.
According to Thompson Builders, the industry lacks all kinds of materials and supplies, including:
- Standard wood paneling
- Pipes
- Ceiling joists
- Plastic roofing membranes
- Plastic composites
- Insulation materials
The alternative materials are far more expensive. However, tradespeople note that developers and homeowners are willing to pay a lot more for materials than put their projects on hold.
Labor Limitations
Labor shortages aren't, of course, making it any easier for companies to catch up with the rising housing demand. From truck drivers to packaging workers to builders, there are shortages at various levels of the property building ladder, as noted by Thompson Builders.
But the pandemic can't be entirely blamed for this decrease in labor.
While the coronavirus has undoubtedly made it hard for people to come into work, especially with social distancing measures in place, the shortages of electricians, carpenters, and other laborers started well over ten years ago.
It's said that the United States of America as a whole has begun to value white-collar employment over trade workers like plumbers. Not to mention that the age of the current tradespeople is much older, with the average age being 43 years old. The industry is struggling to find young workers.
Construction Claims and Litigations in This Climate
So, what does all of this mean? Does it only affect developers looking to move ahead with their projects? The answer is no. Shortages and limitations presented by the pandemic impact a variety of things, not least of all being the construction claims and litigations cases.
Construction litigators have found the COVID-19 world to be an excessively busy time, and it looks as though it'll stay that way for the foreseeable future.
Fraud Claim Increase
Fraud claims are seemingly constant. According to reports, these claims aren't just made against companies, but individual tradespeople too. It's worth understanding that the course of action isn't a new process. It's simply the increasingly high frequency with which they are asserted that has changed throughout the pandemic. Although, many of them never result in a win for the claimer.
Boost in Contractual Disputes
Furthermore, force majeure clauses and other factors of construction contracts are tested more frequently than before the pandemic. Construction teams continue to assert material cost increase claims and delay claims as the litigation sector of the industry battles against nonstop influxes.
Alongside the increase in disputes, extensions and more detailed general conditions are consistently requested.
ADR Gone Virtual: Could This Be the Answer to the Construction Claim Backlog?
ADR, or Alternative Dispute Resolution, went virtual during the pandemic, and the litigators that hopped onboard this train saw huge success, noted Thompson Builders.
Its most effective process when dealing with construction contract disputes and otherwise was mediation. The tactic aims to bring the two parties together through compromise rather than expensive, time-consuming legal action.
The professionals working in construction mediation are highly skilled at being able to help both parties focus on the central issues and work toward a cooperative agreement. Basically, their job is to make everybody happy.
And the best news is that it appears to be working. Virtual ADR may well be the answer to the construction industry's court backlog of fraud claims, contract disputes, and delay claims. In this day and age, you won't survive without going digital! The Thompson Builders litigation blog notes that the pandemic has simply sped up a process that would've needed to happen anyway.
Final Verdict
The pandemic has hit every side of the construction industry. But we have shed light upon a side that many forget — the litigation and legal claims sector.
References
https://www.law.com/2021/07/09/law-com-litigation-trendspotter-the-pandemics-been-a-nightmare-for-the-construction-industry-but-could-be-a-boon-for-the-adr-industry/
https://archinect.com/news/article/150285908/construction-starts-are-rising-in-the-u-s-despite-pandemic-disruptions
https://www.wsj.com/articles/builders-hunt-for-alternatives-to-materials-in-short-supply-11633512601
https://www.kbia.org/2021-10-22/what-do-we-tell-our-customers-labor-shortage-material-delays-hamper-home-construction
https://www.russell-cooke.co.uk/insight/briefings/2021/the-rise-of-mediation-the-answer-to-court-backlog/
