Kansas City Construction and Design in a COVID World: Adapt and Overcome

We’re just weeks away from a new year, and the ability—mercifully—to reference 2020 in the past tense. Eventually, the daily counts of new COVID-19 infections will fall, the numbers of deaths from the pandemic will inevitably tail off.

But the ramifications of a global health crisis will live on in the construction and design disciplines, in some ways permanently reconfiguring one of the region’s, and nation’s, most important drivers of economic growth.

In the near term, the effects are already being felt. According to key executives at some of the region’s biggest firms:

• In higher education, a sudden and swift decline in enrollments has plundered the financial plans of the large public universities that had been best-positioned for large-scale construction projects. That will compel general contractors, mechanical and electrical engineers and architectural firms to seek out other sectors to replenish losses to the project pipeline.
• In health care, finances were similarly crushed in the spring, after elective procedures with higher profitability were deferred to clear space for a crushing patient load that failed to materialize. At many area hospitals, budgets were slashed, staff furloughed and executive pay was scaled back.
• Large office spaces have cleared out, with tens of thousands of employees are still working from home. In some cases, the leadership expects to keep their staffs off-site well into 2021, and perhaps even into 2022. That will dramatically cut into renovation work. ¢ As for new office buildings, if it isn’t ordered by a customer, you’re not likely to see much construction on a spec basis. In manufacturing and construction, new processes and practices have been adopted to keep workers spatially distanced, and schedules adjusted with earlier starts and later finishes to reduce the staff population density. Assembly methods have been revised to minimize the need for larger groups at job sites. And the notion of just-in-time delivery has never enjoyed greater popularity.

And those are just for starters.

“In the post-COVID world, we need to understand how the economy will work and what markets will flourish and which will struggle,” says Ray Kowalik, chairman and CEO of the region’s largest engineering firm, Burns & McDonnell. “Obviously, the home-delivery model is here to stay. Beyond that, we also see the diversification of the electric generation mix continue to evolve.”

The power industry, a key driver of future economic growth, is coping with distributed generation and huge shifts in sourcing to reduce carbon intensity with renewables, battery storage and flexible, fast-start, low-hour units, he said. “Our oil/gas customers are making a big push into renewable fuels also,” Kowalik said. “We’ve made investments in preparing for this shift with our expertise, project delivery, and talent acquisition. While we’ve yet to see the full impact of the pandemic, a particularly thorny challenge for people in that sector, as well as in commercial real estate development and in public-sector offices, will be resolving a conundrum: How will downtowns continue to grow and thrive when the most essential vehicle for that growth—the elevator—is no longer to effectively move large numbers of bodies?

“If you go to the really big cities, New York, and especially Manhattan, you can’t occupy the big buildings,” says Tim Moormeier, president of U.S. Engineering. “It would take hours and hours to get everybody in at three people per elevator car. I have a friend there who says some of the really big companies in Manhattan are probably not all coming back.”

One potential upside of that is the expected demand for new, roomier office space. But it’s clear that a large slice of the work force is destined to remain working remotely for good. “Kansas City is traditionally not a large spec-office market, and it will likely continue to be uncommon to see much office development that is not tenant-specific,” says Paul Neidlein, president of the Midwest Division for JE Dunn Construction. On the bright side, he said, “we are seeing some markets maintain velocity, including the mission critical, justice, and our federal markets.”

In addition, the health-care market here appears to be reviving after a pause over the past year, Neidlein said. “We intentionally maintain a very diverse portfolio of work that will help minimize the impact of any one specific market pulling back,” he said.

At Centric, co-owner Richard Wetzel is seeing much the same with a pullback in new office and retail projects. “But it’s been more than made up in our pipeline of multifamily, industrial, and, surprisingly, hospitality projects,” he said. “We are on plan to meet the 2020 new contract and revenue goals we set for ourselves before the pandemic, which we hope will maintain through year-end.”

At U.S. Engineering, Moormeier, said, only about 20 percent of the staff has returned to office work, and the company has pivoted—hard—to address processes and personnel needs. Work that can be fabricated in advance can arrive on a job site with fewer people needed in the labor chain, he said. And IT-heavy roles like building-information modeling are ideally suited to remote work.

On the production side, though, the difference between assembly and manufacturing is pronounced.

“There’s a lot more volatility on the construction site than in manufacturing facilities,” Moormeier said. “Construction changes every day with subs coming in and out, deliveries—it’s really a bit of orchestrated chaos.” Manufacturing processes, by contrast, are far more structured and organized. “You’re trying to do similar activities the same way every day, in a controlled environment, with the same workers. It’s very, very consistent.”

As far as deploying that labor goes, there are differing views on how comfortably companies can move forward with the available work force.

“Because we have yet to see a slowdown in work, the labor crunch is still acute,” Wetzel said. “Construction is a lagging industry, and may see a slowdown from the current economic crunch in the next 6-18 months, but if so, it hasn’t hit yet.”

The fact that construction was considered an essential business in most Kansas City-area municipalities, he said, allowed the company to keep working through the shelter-in-place orders. “That certainly eased the pain for our industry,” Wetzel said.

Things are more comfortable at JE Dunn. “We are not concerned about labor shortages in Kansas City,” said Neidlein. “While we did see some short-term labor pressure on a few trades, as the largest contractor in the area with a work force of several hundred skilled tradespeople, this was a manageable pre-pandemic and we don’t expect to see major issues as volumes pick up.”

For owners looking to build, Neidlein said, “there is already a re-thinking of building design in the face of the pandemic, trying to predict the space of the future and how we will all work. We have quickly learned about the immediate impact of social distancing on our job sites, but our incredible field leadership has adapted to the new normal in how we work on-site, plan projects to minimize close-contact, and prepare for minor impacts, if there are any.”

Kowalik is seeing the profound shifts on both the construction and design sides.

“Our clients continue to move toward more integrated delivery models,” he said. “Whether you call that EPC or design-build, they are increasingly wanting one entity to handle their project and see that it’s done safely, on schedule and on budget. The efficiency gained with having ALL those resources in house, on one team, is enormous.”

Even before the pandemic had set in, executives across the sector say, the entire construction-design world was ripe for a technical revolution.

“From artificial intelligence to cloud-based applications and systems, technology is changing and disrupting everything in every industry,” Kowalik said. “Technology will continue to drive quality, safety, and speed to market and we are always embracing technology to provide better tools and more mobile applications. We are constantly trying to understand how we can be more efficient and effective with our communications, processes and execution of projects.”