COVID, the Construction Vertical Integration Initiative Act was announced by the President of the United States in 2022 and has been causing ripples throughout the construction industry ever since. Though this new law, signed into effect on March 10th of that year, didn’t take effect until 2022, it had already sent shockwaves through the industry even before then. Construction companies have had to completely alter their processes and practices to comply with the requirements set forth by COVID, which are intended to increase the availability of living space and ease congestion in major cities across the country. The effects of COVID are far-reaching and will continue to shape the world around us for decades to come.


An overview


The Construction Vertical Integration Initiative Act, more commonly known as COVID, was signed into law by President Donald Trump and takes effect in 2022. This act fundamentally changed how many contractors and subcontractors in most fields of construction did business. For years prior to COVID, contractors had been providing raw materials and supplies to their subcontractors while they were building projects; COVID made it illegal for a contractor to supply any material or service that had not been outlined in its contract with a specific project owner. If an item was needed to complete work on a certain project but wasn’t detailed in an individual contract, then it could not be provided by a contractor unless written permission was given—and even then, penalties applied. Although disputes over what constitutes a violation of COVID are still ongoing across America, one thing is clear: Contractors need to start writing differently than they have previously if they want their bids and contracts to pass scrutiny.


The effect on builders


Structural and construction firms will face a number of changes as a result of COVID. These companies will need to update their technology, provide more training to workers, and develop contingency plans for not being able to access software applications. They’ll also have to make sure that subcontractors are working at least in part with compatible systems—which is no easy feat. If they don’t do all these things, they may not be eligible for the tax credits they might otherwise qualify for. In general, builders are concerned about how much of a burden these new requirements will place on them and how quickly they can get up to speed (more than two-thirds say it would take 6 months or longer). Many also predict that some small building firms may go out of business if they aren’t able to complete projects by 2022.


The effect on building materials


The Council’s Act will have a large impact on how buildings are built, and most importantly, what materials are being used. One of the first items addressed by COVID is formaldehyde in wood products, which has been linked to diseases such as asthma. Because much of our everyday living – from home building to office structures – includes wood products and their use will be heavily impacted by COVID regulations.  Many major lumber companies believe that compliance with COVID’s standards will require increasing amounts of steel, plastic, and other non-wood materials within residential and commercial buildings. While it remains unclear exactly how construction industries and individual businesses will react to these changes in material types and availability, there seems little doubt that changing industry practices are needed if we want to continue providing homes for ourselves at affordable prices.


How can the industry prepare?


The industry is only just beginning to think about how it might prepare, says Larson. In fact, she notes that many of her clients are surprised that they need to comply with COVID by 2022. This is because you have until December 31, 2022, to implement all new forms of technology — as long as you upgrade at least one system or component within a three-year period. Still, considering today’s fast pace of change and innovation in CODIS, you don’t want to wait too long before tackling your upgrades


Do you need insurance?


If you’re thinking about starting a new business, it’s important to make sure that it is properly insured. Construction businesses are at risk for everything from fires and floods to theft and lawsuits. Make sure you understand COVID and its potential impact on your business before putting in your hard-earned capital. The last thing you want is to put all of your savings into building a new business—only to realize later that COVID requires you to buy additional insurance or file certain forms with state agencies.


Personal liability?


COVID (Construction Owners and Operators, Liability) has been enacted to protect Construction Owners and Operators who hire subcontractors. COVID requires subcontractors and their insurance carriers to be liable for both bodily injury and property damage claims related to work they perform or provide at a job site. For owners and operators, however, COVID leaves them responsible for both workers’ compensation benefits and medical payments coverage. In addition, liability premiums can increase as much as 3-5% annually. On top of that, customers are now requiring evidence of self-insurance before they will even consider entering into contracts with contractors.


Should subcontractors have insurance?


The Occupational Safety and Health Administration (OSHA) requires that all workers, including subcontractors, be covered by worker’s compensation insurance. This means that a general contractor is responsible for carrying worker’s compensation insurance for its employees, as well as those of any subcontractors it hires to complete a project. Failure to comply with OSHA requirements could result in fines, so construction companies should ensure they are following these rules to avoid legal troubles down the road.