Safety measures have always been a paramount consideration for construction companies, whether protecting the jobsite with specific materials, such as site fencing, debris netting and safety harnesses, or protecting the workers with hard hats, safety glasses and protective gloves. In the era of COVID-19, contractors are practicing these good safety and welfare measures, as they have always done, in addition to COVID-specific measures. Safety comes naturally to most contractors, albeit there are less employees working onsite due to worker capacity restrictions.

Historically, these safety measures have provided all parties who have reason to be on the jobsite with assurances that certain standards and practices are being followed. This benefits not only those working at a particular project, but all that have reason to come into contact with the site. New COVID-19-related safety measures, including trace screening and temperature verification, reassure all involved that these measures are enacted for the safety of all, including the owner, architect, general and subcontractors, insurance and bonding representatives, as well as the general public.

The risk to all parties involved on these construction sites is now amplified to a new level. Historical trends and statistical data have shown that contractors have always taken on unforeseen risks, but now they face further risks associated with the COVID-19 pandemic. These risks include the potential positive testing of an individual and widespread outbreaks on a job.

Previously, owners, general contractors and subcontractors only had to assume the risks associated with the job, which they could try to mitigate through adequate insurance coverage and construction bonding. Now, however, they also have to think beyond the norm and take additional precautions against something they have no prior experience or training with.

This additional risk undertaken by the companies associated with the jobsite does not stop with just the owner, general contractor, subcontractor, suppliers and/or vendors. It extends also to the insurance and bonding companies as well since they, by extension, are also assuming these risks as they write the associated insurance coverages and performance and payment bonds.

With specific focus on the bonding company’s risk, any surety company writing bonds for a construction project now must determine how any shutdown or unanticipated event will be viewed or interpreted as to:

• whether it could have been avoided through additional safety precautions and measures taken; and
• whether the impact to the project causes any shut down or delay and, if so, who is responsible for the associated delay damages (liquidated or consequential).
  

Surety companies are now looking at contracts with their construction principals with even more scrutiny. The unanticipated consequences could be even greater than what was originally underwritten by the surety company due to the uncharted waters all parties are now navigating as a result of the pandemic. Surety companies must be very diligent in their efforts to make sure that their principal does not enter into a contract that puts them (the contractor) in a very onerous position should an event like a COVID-19 outbreak cause a job shutdown. If the surety company does decide to undertake the bonds required by their principal for a project, the surety company now takes on that associated risk as well.

Safety and employee welfare has and will always be at the top of a construction firm’s priorities when taking on a project. Keeping the jobsite safe is something no construction firm takes for granted. However, the risks associated with these construction projects are changing and will continue to change. This will require each party involved in the project to invoke furthere measures to mitigate their exposure to these new risks.

Learn more by getting in touch with a PHLY Surety Representative. Fill out our form and hear from us within one business day.

Get in touch with PHLY