Practical Tips For Owners And Contractors Impacted By Hurricanes Harvey and Irma

Anyone watching what has happened in Houston, and what is predicted to happen in Florida, immediately thinks about the safety and well-being of those affected by Hurricanes Harvey and Irma. Once the rain stops, the water recedes, and the aftermath of destruction is assessed, both areas and their residents will be looking at a long road to recovery, much in the same way as New Orleans in 2005 (Hurricane Katrina) and New York/New Jersey in 2012 (SuperStorm Sandy). Among the many challenges that lie ahead, owners and contractors of existing projects, whether in Houston, Florida, or in other parts of the country, as well as those involved in new projects to rebuild, must take steps to assess the impacts and identify their contractual rights and obligations. For those in Houston and Florida, this will no doubt mean working closely with their insurance carriers to recover project related losses. For those in other parts of the country, contracting parties need to assess the impact, if any, on the projects and ascertain their available remedies.

Potential Hurricane-Related Impacts

Hurricanes can cause supply side and demand side issues with raw materials, supplies, and equipment, especially at critical junctures such as ports and warehouses due to their location on or near the coast. Natural disasters often affect the construction industry in the form of price increases and material scarcity. For example, oil shortages during a hurricane can greatly affect commercial contractors who rely upon diesel-powered machinery. Similarly, natural gas shortages cause prices to spike, which increases the cost of producing asphalt, paints, and tires for heavy machinery.

Hurricanes can also impact the timely flow of materials, supplies, and equipment. In 2005, Hurricane Katrina created shortages of resins produced from oil that manufacturers needed to create polyvinylchloride (PVC) and other vinyl products. Damage caused by Katrina in the Gulf of Mexico disrupted supplies of ethylene and natural gas during the second half of 2005. In the aftermath of Katrina, repair efforts along the Gulf Coast quickly consumed many building materials, creating short term shortages and further price hikes. If equipment, materials, and supplies, are coming from the impacted areas, projects run the risk of delay. Moreover, supplies, equipment, materials and labor may be diverted to Houston and Florida, which could further impact your project.

Remedies Contractors May Seek From...