With the government shutting down all non-essential activities and various workers and employees compelled to stay home, most projects throughout the country are now in pause-mode.
Construction owners can expect delays on all projects. These delays could be due to supply shortages, labor issues, etc. At the moment, there is no light at the end of the COVID-19 tunnel, and the challenges and losses that many construction project owners are experiencing are massive, to say the least.
But most companies like to maintain a positive outlook and are trying their level best to see how they can keep the boat afloat now so they can get off to a better start once the government lifts the COVID-19 isolation directives. However, it's also essential to be aware of the potential challenges that you can expect once the pandemic crisis has blown over.
Post- COVID-19 Challenges for the Construction Industry
Here we take a look at some of the risks and issues that will be a norm even after things come back on track. We also take a look at some things you can do to mitigate the risks to some degree by taking specific steps now.
Completion Risks
- Because of the potential of the widespread effects of the COVID-19 pandemic, even when the cloud lifts, most construction projects will experience disruptions and delays.
- The labor market in many regions throughout the United States is already tight, and companies are struggling to find skilled workers to complete the jobs on schedule. Even when the COVID-19 pandemic fades, it will take time for people to get back to regular work schedules. It's not like a switch that people can turn on, expecting everything to get back to normalcy and construction to start in full swing.
- It's likely that even post the pandemic, there will be certain restrictions on the movement of people within the country, and that will surely be an impact on the construction industry.
- COVID-19 is currently causing cash-flow concerns, supply-chain disruption, as well as financing/funding restrictions and cuts. It’s also why many critical work activities are being rescheduled or extended. Contractors are now adjusting their methods and means for performing works to comply with various governmental mandates and instructions.
The Projected Challenges
COVID-19 impacts even after isolation is lifted include commercial risks, including labor-cost escalation, commodity price swings, higher interest payments, and extended performance costs. More workers will likely choose to telecommute permanently.
Since there is and will continue to be disruption in the supply chain for materials like lumber, steel, drywall as well as construction equipment, it can result in cost escalations and delays. It means the owners would need to be prepared to fork-out higher amounts for already-delayed projects.
When project completion dates get extended, construction owners are also immediately exposed to higher costs for consultants, third-party construction managers, and internal project management staff. Such delays will have a chain effect and are likely to result in higher developer costs, financing costs, and management fees.
How Construction Owners Can Dull the Impact
The current slowdown in all procurement activity by the government (as well as institutional clients), along with the anticipated reductions endowment funds and tax revenues, could dampen construction activity in 2021 and further into 2022. Experts anticipate a rapid revival of all types of construction activity once the COVID-19 crisis abates, and new kinds of opportunities will surface. Although this would be a good thing, the challenges will remain.
Once the COVID-19 isolation is lifted, construction owners will have to act quickly, identify, assess, and effectively mitigate any further completion risks on their massive capital construction programs and projects. This may require them to conduct detailed scheduling reviews for their stalled projects, especially those which are in the early to middle completion stages.
Designing a Comeback Strategy
Instead of adjusting the determinative schedules, the construction owners may need to first perform QRAs (quantitative risk assessments), on their plans at that point. These QRAs would give them a better understanding of the likely completion dates.
Developing specific procedures for and then executing QRAs on their large-scale construction projects is the ideal project-control leading practice not just for contractors but owners too. Engaging stakeholders and contractors in early discussions and having a comeback strategy in place is the one way to bounce back with the least bruises.
The ultimate impact of the COVID-19 pandemic on the construction industry will be known only when the crisis is contained. Anything that is planned now is just conjecture and not something we can bank upon, will happen. The only way to dull the impact and come out with minimal damage and losses is to be prepared, dynamic in your approach, and ready to adapt and resolve issues that crop up along the way.