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.
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Originally published in ME Construction News.
