Covid-19 and Canadian contractors: Life after the biggest Change Order of all time

Normal life is just so “last week.”

Just four days into a partial shutdown of Canada’s day-to-day business environment, Canadian renovators and custom homebuilders are making rapid changes to their business operations.

The fallout from Covid-19 is the biggest and most painful Change Order most of us have ever seen.

Where to start? Let’s look at the good news.

At time of writing, no major Canadian retailers of building materials and hardware had closed their doors. Many box stores have reduced their hours. However, it’s likely that some stores will go to a “take out” only menu, as many Canadian restaurants in major centres have now done based on government recomendations.

Mattamy Homes, one of Canada’s largest tract builders, has announced that it has shut down all customer-facing and site operations.

Independent contractors, on the other hand, are mostly continuing to work. Ben Polley, president of Evolve Builders Group, Guelph, Ont. says “We are staggering through it. I simply wouldn’t have believed, even a few short weeks ago, that this would have come to pass.”

Polley said that his firm was, like most, “totally unprepared” for the scale of the changes to society, even though Evolve had a “business contingency and emergency preparedness plan in place.”

The good news for Polley is that the office side of his operation was already operating on cloud-based systems, so his administrative functions have easily transitioned to working from home.

But onsite, Evolve has had to introduce emergency policies – all the way from no more carpooling for employees to limiting on-site personnel to 2 to 3 people, maximum, on site at a time. Polley’s company is also instituting a policy that worksites have to be unoccupied by the owners/tenants. If this is not possible, the firm will “totally isolate” the renovations from the rest of the living quarters. Polley is also bringing in outside sanitation facilities like portable toilets – although he notes that the ones with running hot water are now very hard to find.

The biggest problem right now, Polley says, is that so many major municipalities in the Greater Toronto Area and Golden Horseshoe area of Ontario have shut down their inspections. “Without inspections, we will run out of work,” Polley says. He says that many building departments have said that inspections will be unavailable until at least April 6th. But nobody really believes that life and business will return to normal in Canada by then.

Polley commended the building department in Grey County, close to his home base of Guelph, for continuing with inspections.

As far as the supply of building materials and hardware goes, Polley has experienced no problems so far from RONA, one of his major suppliers, although he expects that reduced hours will become commonplace and he expects that retailers may close their doors to consumers. “It will be walk up and pick up your materials only,” he predicts.

Rob Allan, president of RBA Projects Inc., Toronto, said he has had projects cancelled this week as well as two large-scale condo renovations indefinitely delayed. In the latter case, the owners are out of the country and just can’t get back to Canada.

“But our active projects are still moving along,” Allan said. “We’ve been talking to all of the sub trades to put in safety procedures. And we are spreading the trades out more between jobs.” Allan is trying to limit trades to a maximum of three per site.

Allan has three new builds that were due to start soon. “The clients are optimistic we can go forward.” But the sticking point, again, is with inspections.

“Inspectors have told us that, as of this week, they are on the shelf for three weeks. No permits, no construction.”

Allan has no problems getting supplies from building materials retailers but specialty distributor Noble Trade “is not serving anyone over the desk” in his area, Allan says. “It’s online only orders.” However, Allan has high praise for several independently-owned dealers, such as Home Building Centre in Gravenhurst, Ont., which are operating normally.

Allan is also still getting good service from Tool Box, a specialty onsite delivery firm.

Allan believes that custom homebuilders and renovators like him have an advantage over the big constructors in this current environment. “The big condo sites, many of them are shut down. The tract builders also. The hope is that custom firms like ours can keep going.”

But there are many concerns about the flow of money. “One of my aluminum guys was telling me that the purse strings are already tightening right down. When the money stops, construction stops.”

As a firm that carries administration and design in-house, but subs everything else out, Allan believes he is in better shape than many employee-based firms.

One Southern Ontario contractor we talked to preferred to remain anonymous. Asked about cash flow, the contractor said they had no immediate concerns, but said they were meeting with a private lender yesterday afternoon.

This firm is a design-build operation. It has six projects going through the design phase with the two in-house designers able to work from home during the Covid-19 social distancing period.

The contractor said the firm has already put Covid-19 precautions in place for job sites. They don’t want to have more than one trade on site at a time – and no one who has been traveling outside the country in the last 14 days. At the end of the workday, everything on the job site is wiped down with disinfectant wipes.

Current projects have been definitely affected. One large project underway was to consist of a main floor renovation and a bathroom. Now, the contractor says they will just do the bathroom itself and “put off” the rest of the project.

Another large project, which was due to begin shortly, is for a client that owns nine properties. The one project that the firm was expected to start requires a tenant to relocate first. It is unknown if that is going to be a problem, depending on the tenant’s personal/job situation.

As for layoffs of employees, they are of course a possibility, the contractor said. The contractor will definitely keep on their two designers – which generate cashflow and can work safely from home offices. The company has holdbacks waiting to come in but is unsure when those will be paid. “It’s crazy. It’s a little surreal.”