When it comes to COVID-19 and the construction industry, the key right now is to wait and see. The reason being is that changes are still happening and there is no way to predict what will happen. There is no way to know the full impact at this time.
Panic is already sweeping the nation and is as debilitating as the illness itself. There is no way to control this until people feel more secure. That will not happen until the pandemic has passed. Until then, industries need to see what will happen.
Contractors are not strangers to risks. The industry is used to them. From labor shortages to escalating tariffs, they are not overly concerned. They already entered the year with several unknowns, including the presidential election, so one more variable is not a shock. The construction industry is aware there will be fallout, but cannot know for sure what is coming.
The experts have devised the top 6 ways that this global health crisis will affect the construction industry in the U.S.
1. Employee health: Companies in affected areas need to be concerned about the welfare of their employees. At this time, transmission outside the healthcare sector is low, but this can change at any time. Employers need to talk to their employees about the issue and set procedures in place to enforce hygiene and safety. They need to share the importance of talking about facts and not sharing false information and panic.
It is only a matter of time before this becomes a bigger problem for the industry, some employers need to get protocols in place now. Open communication with their employees is key to this. Mental health is also a priority as this pandemic continues to cause fear and anxiety.
Employers also need to consider what happens if transportation is closed down. Employees may not be able to get to work. If the workforce gets reduced or quarantines, projects can come to a halt. Employee health and safety has a big impact on the industry and individual construction companies.
2. Material delays: Chinese factories have closed which impacts the availability of materials. A falloff in production has already been noted and is expected to get worse. This means higher costs for materials and the slowing of projects. Nearly 30% of all U.S. building product imports come from China, but some American construction firms rely on China for up to 80% of their materials. Supply shortages will impact building progress. Alternative suppliers in the US will be needed and these may be more expensive.
3. Nervous clients: One of the biggest consequences of the industry is going to be nervous clients and lenders. Financing for big projects may drop until things become more certain. Interest rates are at an all-time low, but it is still an uncertain time to invest. Higher prices and lack of financing will hit building projects hard. Delivery times and material delays play into this too, as lenders will no longer have clarity as to when p[rojects will be complete. As a result, they can pull funding. Having insurance policies in place can mitigate this problem to an extent. Employers are advised to check their policies to see what is covered. Disruption is not uncommon. But whether or not the virus is an acceptable reason for delay.
4. Travel bans: Many businesses and establishments have closed to slow and stop the virus spread. An outbreak near a construction company may mean quarantine and closure for them. Closing sites will be a financial burden and delay projects. Halting projects will be determined on a case-by-case basis. The situation needs to be monitored closely. Other companies have had to place travel bans for employees. This is mostly only for international businesses. Companies need to work remotely which means employers need to provide them the necessary tools to get this done.
5. Legal issues: Contractors need to review all contracts to see what contractual rights they have as the virus spreads. They need to have a discussion regarding schedules, delays, completion, and provisions. The contract needs to be thoroughly reviewed. Ant mention of force majeure is also important. This allows suspension of work under extenuating circumstances. Courts will have to decide if COVID-19 is a legal and accepted circumstance. ?the impact this has had on supply chains, makes it eligible for a valid claim.
6. Global uncertainty: The stock market has been volatile after oil disputes in the Middle East. Anxiety levels in the U.S have been on the increase ever since. Social security and pensions are shrinking every day. The virus has had a similar effect on the markets, causing a scare. Experts no longer feel able to make a prediction for stocks this year. The situation is uncertain. It is expected that the economy will enter a recession, and the construction industry will feel a lag.
In construction, everything comes down to money and time. The industry needs to prepare now even though much is unknown. Without knowing how big the impact will be, all you can do is prepare. Staying calm, taking care of employees, making legal and contractual changes as needed, and staying informed is the best defense for construction at this time.