Has the coronavirus affected the Middle East’s construction sector?

HKA explores the implications of the coronavirus on businesses and how it could be treated as a Force Majeure event

The outbreak of the coronavirus (COVID-19) was first reported on 31 December 2019 from Wuhan, China. The World Health Organization have reported over 43,000 confirmed cases globally, 42,000 of those in China, with 1,000 fatalities. For many, the impact of the coronavirus has been devastating, and the consequential impact of this terrible virus has had far reaching implications.

The purpose of this article is to explore the impact of the coronavirus on businesses, and in particular, the Middle East construction industry. This article will discuss the potential of the coronavirus being treated as a Force Majeure event.

The impact of the coronavirus within the Middle East cannot be underestimated. In particular, we can see our Chinese contractor clients working extremely hard to navigate the impact of this virus and minimise the impact on projects they are delivering. But despite these efforts, the impact on work force and supply chain continues to be detrimental to progress on site.

Many construction professionals and site workers were on vacation in China celebrating Chinese new year when the outbreak occurred. As a precaution, mainland China implemented certain safety measures prohibiting outbound travel, meaning these workers are unable to return to the region and continue work.

The global supply chain has also been severely disrupted. Logistics have been impacted and factory output reduced. It has meant material and equipment suppliers have been unable to meet their obligations. This in turn has adversely impacted progress on construction sites and has resulted in delays. However, with little sign of an immediate cure to the coronavirus, there remains a significant risk of further delays and cost overruns.

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Originally published in Construction Week Online.

This publication presents the views, thoughts or opinions of the author and not necessarily those of HKA. Whilst we take every care to ensure the accuracy of this information at the time of publication, the content is not intended to deal with all aspects of the subject referred to, should not be relied upon and does not constitute advice of any kind. This publication is protected by copyright © 2019 HKA Global Ltd.

The global supply chain has also been severely disrupted. Logistics have been impacted and factory output reduced. It has meant material and equipment suppliers have been unable to meet their obligations. This in turn has adversely impacted progress on construction sites and has resulted in delays. However, with little sign of an immediate cure to the coronavirus, there remains a significant risk of further delays and cost overruns.”
Haroon Niazi, Partner, Head of Middle East, HKA
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