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Emerging from the Crisis – Potential Issues and Opportunities

With the world in the midst of the greatest pandemic since the Spanish Flu of 1918, the Novel Coronavirus, or as it is more commonly known, Covid-19, is continuing to put unprecedented pressure on global economic activities. The construction industry, like others, is feeling the effects from widespread shutdowns to manufacturing facilities, continued closures of international borders and restrictions to site activities due to local lockdown measures.

In the absence of any clear timeline showing how long projects and site operations may be affected, contractors, subcontractors, suppliers and clients need to demonstrate their agility and pragmatic approaches to sustain their operations and avoid any potential disputes placing a further financial strain on their businesses as they emerge from this crisis.

Impact of Covid-19 on Construction Site Operations

Although governments have yet to formally shutdown site operations in the Middle East, the unpredictability of when the virus will peak in individual countries means that border closures are likely to remain for the foreseeable future. The resultant controls on the movement of people, goods and equipment means that supply chains will continue to be severely affected, and in some cases may ultimately lead to the suspension or termination of agreements or projects in their entirety.

First, for ongoing construction projects, one of the immediate effects will be disruption to manpower deployment on projects due to quarantine and infection control measures, such as restrictions on the number of people at site or altered working patterns. While some construction support activities can be carried out remotely, site operations are likely to encounter significant disruption from declining productivity and slowdown of administrative processes. Post-Covid-19, the situation may be further compounded by new government controls on visas, stringent health and safety checks, enhanced Personal Protective Equipment (PPE) requirements, social distancing, along with a potential increase in insurance premiums.

Second, projects will also be faced with supply chain issues due to limitations on the manufacturing and shipping of materials, goods and equipment. As construction processes regularly involve resources beyond the project country’s boundaries, significant delays and/or disruption are likely to continue to projects, unless contractors and their subcontractors are able to procure items elsewhere from countries that have relaxed their restrictions. In this case, the pressure will be put on local demand and supply capabilities which may cause construction costs to increase.

Third, due to sudden unplanned closures of project sites due to the Covid-19 outbreak, there is the risk of damage to uninstalled materials and equipment and improperly protected works. 

Finally, due to the above issues, the solvency of contractors, subcontractors, suppliers and clients will be heavily tested in continuing the execution of projects. The robustness and financial position of all construction stakeholders and governments will be stretched and tested. This article considers some of the many challenges and potential issues that contractors, subcontractors, suppliers and clients alike may face once restrictions are lifted, considering the likely radically different global economic realities of a post-Covid-19 world.

To read more, download the full article.

Originally published in ME Construction News.

Construction is a known key impetus for economic recovery and all stakeholders should utilise this time to demonstrate their resilience, agility and preparedness to their clients.”
Tom Kapapa, Partner and Olivia Taylor, Associate Consultant HKA

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 © 2020 HKA Global Ltd.

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