Six months on from my last blog ‘3 ways Covid-19 will impact on construction’, let’s look at what has happened, what is happening and what’s still to come?

COVID-19 did, in a very a short period of time, disrupt everyone’s work patterns, lives and the way we all work. Initially all of our projects on site stopped, reflecting what was happening throughout the industry. The government locked down what was possible versus what was required (only essential works were deemed acceptable at first).

To begin with, our biggest issue was the contracts already in place – initially we thought force majeure would come into play, but this was not the case. As the government was very loose with their wording, any stoppages on site were not allowed for under the current contracts; we had clients paying interest on project loans and expecting jobs finished, and contractors whose staff did not want to work and had material issues. There was no clear mechanism to deal with the situation, not withstanding the human element and tragedy that was unfolding around us.  Subsequent contract guidance was not forthcoming but JCT did release their views:   https://corporate.jctltd.co.uk/wp-content/uploads/2020/04/Coronavirus-Covid-19-and-JCT-Contracts-v3.pdf 

So looking back at my predictions, what did happen?

1. Availability of Building Materials

The key things here were not 100% what I expected. Most EU and world market items have had some additional lead in time but have not given rise to concern on site. However, plaster, plasterboard, cement and timber have become rare commodities often commanding more than 4 times the price and contractors having to wait weeks for a reduced supply.

(Some of our friendly builders have told us they now have multiple trade accounts at multiple wholesalers to try to get the amounts required and in the time frames needed. One sub-contractor hired a van and drove to Ireland to pick up plaster!)

2. Labour

I noted that ‘While Government allows, the employer must decide if their workforce can stay safe. Good hygiene practice and keeping distance, perhaps even having teams on rota to reduce numbers and proximity on site, could keep many sites still moving forward for now, until the Government rule otherwise.’

Some contractors just didn’t turn up, some decided that family was more important than their job, others didn’t believe it was an issue. As ever, when dealing with a cross section of society the various factors involved in people’s lives cannot be easily bundled into one strategy.

Most of the contractors we work with have had issues, have had back office staff on furlough adding additional time to get paperwork out, and most have now put in place rigorous schemes on site to maintain the health and safety of their staff.

At Cityzen we have minimised site meetings, often doing them virtually and out of hours and at weekends to minimise risks.

What will a second spike do to an already stretched industry?

3. Future Projects

Last year was hard enough for the industry, with many clients only instructing projects to a pre-construction or even just planning stage, and then not progressing further due to political and trade uncertainty.

Speaking to our circle of construction professionals, a large proportion of them are not seeing the usual flow of new project leads which is a concern. Developers and investors are holding off new projects. We are also hearing that funding for projects is being tightened up, lending offer rates and criteria are also stopping smaller projects getting started.

Overall this has a knock on effect which pushes the design and construction lag to getting new projects into 2021, which is a bit of a worry with Brexit also looking like it will be detrimental to the importing of goods, materials and equipment.

I feel we are still in an unprecedented situation. Our industry should still be bracing for impact, but we still need to think creatively to prepare for what’s next – when our communities, industries and the wider economy begin to recover.

The housing deficit will still exist, and we will still need to build. Normal service will resume in terms of the available workforce and supply of materials. In addition, interest rates will be kept low to encourage recovery, thereby making funding for projects more accessible (but see my notes above re lenders not lending!). All of this is helpful to remember in the context of longer-term construction goals. We think we have lost sight of 6 to 12 months’ worth of projects so far this year, but we have been very lucky with our existing clients and still have a good cross section of work.

But pre-COVID we had geared up to significantly expand. There is a saying that I think about a lot “if you are not moving forward you are going backwards” which resonates with me, and we are always striving to do things better, more efficiently, and ready to shift our business focus to where it’s needed. All of us want to keep working and design teams wish to keep the future funnel of construction filled, so that there are projects – to use that phrase ‘oven-ready’ – once movement of people allows it. Let’s hope things pick up again otherwise due to the length of time it takes to develop construction projects, the construction industry won’t feel the real impact of COVID-19 until right about Brexit.

On that happy note, we at Cityzen would like to say good luck to all of our colleagues across the construction industry for the coming months.

We know it’s going to be tough, so if there’s anything we can do to help, please get in touch.