Lauren Webster (4)

October 22, 2020

Posted by Home (ENG)

Implications of the Covid-19 Pandemic on the Construction industry.

The onset of the global Covid-19 pandemic was unexpected and changed the way we work, live and interact with other people – and still, 7 months later, there are still huge implications for various industries that have no end in sight. I previously wrote about the future of procurement and how businesses have, and will, maintain profitability going forward.

The construction industry is no different; there are numerous factors that were immediately affected by the onset of the pandemic, arguably first and foremost, the practical challenges of social distancing in the industry was the biggest obstacle to overcome. In an industry where close proximity is unavoidable, how does social distancing directly impact the productivity of construction companies?

With the unknown element of the health impact of Coronavirus, the consideration of the health and safety of employees in the industry was something that was undoubtedly at the forefront of everyone’s minds. Ensuring the wellbeing of staff may have meant reducing the workforce considerably, resulting in a direct impact on productivity.

Financial complications of course were, and still are, a huge factor for arguably every industry worldwide. Many construction companies operate without substantial capital reserves which for those companies resulted in further complications such as debt, sourcing alternative capital and for some, insolvency. In a survey by PwC, 81% of CFOs considered cost reductions in response to the crisis, with 60% planning to defer or cancel investments. (1)

With the ‘new normal’ constantly changing and evolving, the long term effects shift as well as the time frame to reach previous profitability, with profits predicted to reach 2019 levels no earlier than 2023. (2)

So where does the future of the construction industry lie, and how can success be ensured?

Off-site manufacturing could be the answer to social distancing in the construction industry, building components in off-site, controlled environments where they can be built externally, then moving on-site when needed to avoid as much close-contact as possible.

In the modern age, there is an ‘app for everything’ – including tracking employee wellbeing and communication. Not only that, but using digital design software for project planning rather than the old-school hand-drawn designs would encourage remote working and further reduce close contact on-site.

Arguably the most important, supply chain and resilience. Maintaining customer expectations, cost, and profitability, as well as relationships with suppliers is no easy task, particularly in the midst of a global pandemic. The resilience of a supply chain under pressure can have long-lasting effects on not only the relationship between the supplier and the procurement team of a business, but it can also result in sustainable cost reductions. If a supplier doesn’t have the ability to be flexible, businesses may source alternative suppliers.

With the constantly changing and evolving rules and regulations surrounding everyday life and impacting businesses, it’s impossible to say for certain what the future will be. That said, it’s important to consider implications for the future and the success for the business, but with no end in sight, what can businesses do to maintain until they are able to flourish once again?

 

  1. https://www.pwc.com/gx/en/issues/crisis-solutions/covid-19/engineering-construction-post-covid-world.html
  2. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/safeguarding-our-lives-and-our-livelihoods-the-imperative-of-our-time