How to manage impact of weather events on construction projects
With weather events increasing in frequency and severity, consulting firm HKA outlined several steps companies can take to manage associated risk and costs in construction projects.
According to National Oceanic and Atmospheric Administration (NOAA), weather disasters have more than doubled since 1980. In 2022, the NOAA listed 18 weather-related disasters exceeding $1 billion in losses. Disaster types included severe storms, winter storms, cyclones, hurricanes, flooding, and wildfires.
Frequency of major natural disasters has ramped up significantly, with an average of 17.8 annually in the last five years, compared to an average of 7.9 annually in the four decades since 1980.
HKA report authors Michael Cuevas and Patricia McCunney-Thomas say construction projects can be affected by severe weather events in oft-overlooked ways. Contractors must demobilize and then assess and mitigate damages to in-progress structures, equipment, and materials. Remobilization can take days or weeks depending on damage and other factors.
According to research from the Air Force Institute of Technology, weather delays 45% of construction projects worldwide, costing billions in additional expenses and lost revenue.
Figuring out who pays for weather-related delays can lead to litigation and further costs and delays.
Cuevas and McCunney-Thomas list several steps construction industry firms can take to prepare for severe weather.
Companies should firstly have disaster plans in place that are periodically updated to reflect changing weather patterns and preparedness regulations.
Firms should also have clarity on what contracts allow and what insurance covers, especially since many don’t address risks and responsibilities relating to severe weather. Insurance may reimburse physical damages, but related delay costs, material storage, and debris removal may not be covered.
Companies have to consider the impacts beyond physical damage, such as demobilization time, idled workers, increased security needs, and accelerated schedules. Costs can also spike when numerous sites shut down in a specific geographic area, creating a surge in demand for materials and labor afterward.
Cuevas and McCunney-Thomas also recommend having sound document and cost management reporting systems in place. Weather-related costs must be accurately captured for construction and insurance claims and disputes – so it’s also important to back up electronic data that would be normally stored on jobsite computers.
Finally, companies should set up a team to manage weather events and other emergencies. The team should include upper management, corporate counsel, financial officers, engineers, jobsite representatives, and advisors versed in insurance claims and delay-related constructions disputes, such as HKA.
