Staying up-to-date on the impacts of coronavirus

As we all know, 2020 has brought about unprecedented change due to
COVID-19. For the construction and electrical industries, the year started
out riding a wave of growth that in many cases has suddenly come to a halt…

Here, we’re taking a look at what’s happening in our industry today, and
projections for the future

Construction during coronavirus

Life as we know it changed, at least temporarily in March when a lockdown was announced. For construction, this meant many stoppages on projects, at least until new safety measures could be implemented for social distancing.

While the UK government allowed construction to continue within safety guidelines, steep declines were seen due to weaker demand and client concern about the feasibility of starting new projects during a pandemic. Temporary stoppages occurred in many cases where companies had to devise new practices for hygiene and social distancing, including installation of resources such as handwashing or dividers.

In the residential sector, work that is “absolutely necessary” such as emergency electrical or plumbing repairs is allowed to continue throughout lockdown, as long as Public Health England guidelines for safe distancing are followed. Some industry bodies have further guidelines, including things like calling the customer ahead and asking them to remain in a different room, avoiding getting a signature and wearing proper gloves.

Economic impacts

The after-effects of the global financial crisis are still vivid in the memories of many in the construction sector. Around 400,000 jobs were lost during that period so naturally, there is huge concern around the implications of coronavirus for construction sector jobs.

The shutdown in March quickly led to a decline in construction activity at the fastest pace since the financial crisis. Many in the sector halted work to respect isolation requirements and were forced to lay off workers. This is reflected in the results of the IHS Markit purchasing managers’ index for UK construction, which dropped to 39.3 in March, from 52.6 the previous month, marking the lowest reading in more than 10 years. This was then superseded by April’s reading of 8.2, marking the steepest pace of contraction in the sector since data was first collected in April 1997.

The following is an extract from the most recent report:

“...record declines in house building, commercial activity and civil engineering works, and complete stoppages of activity on site due to the coronavirus pandemic. New business volumes fell the most on record and employment dropped sharply, with employees often placed on furlough until work on site could recommence with social distancing measures. Meanwhile, the latest lengthening of average lead times for the delivery of construction products and materials was by far the steepest since the survey began in April 1997.”

Source

The screenshot below shows various reported impacts of the coronavirus on construction and is taken from the newly-available Roadmap to Recovery report (detailed in a later section):

Policies and procedures

The public health guidelines have meant some big changes to how those in the construction sector conduct their work, which also present some unique challenges. For example, there are some tasks that make keeping a six foot “social distance” between workers difficult, if not impossible. Businesses are often having to assess their procedures on a case-by-case basis, asking themselves:

1. Is this task necessary right now?
2. If yes, can it be done while maintaining social distancing?
3. If social distancing renders the task unsafe, what do we need to have in place so it can be conducted safely?

Inevitably, some of the layoffs and shutdowns have occurred as companies found it infeasible to continue, especially given the extra requirements for their work. In other cases, work has continued or resumed, but contractors entering a building site or a residential home are adding “extras” to their regular processes, such as cleaning down all surfaces they will be in contact with.

Digital solutions have also been playing a big role in supporting new policies and procedures under the coronavirus. For example, Checkatrade has promoted video calling as a means of providing a quote, while many businesses are turning to services such as WhatsApp.

Digital solutions and cloud based software tools have also been playing a
big role in supporting new policies and procedures during the coronavirus
pandemic.

To allow for effective social distancing in a workplace, cloud-based tools
like Countfire enable an estimator to create a quotation and carry out
their duties with no physical interaction needed. Documents can be shared
via the cloud and the whole team can stay up-to-date with where an
estimator is at in the process. This facilitates ease of communication and
transparency within an organisation, whilst also respecting the social
distancing rules in place.

What’s next?

It may sound pessimistic, but many industry insiders are expecting that there will be further downturn in the construction industry, especially in terms of private sector projects. There are still reasons to be cautiously optimistic, however.

Industry groups are calling upon the government to ensure that recovery plans continue to include help for affected businesses and to invest in public sector infrastructure, helping to boost economic activity and construction jobs.

The National Federation of Builders is pleased with some of the steps taken by the government (such as providing relief on Community Infrastructure Levy regulations), but urges more action on the administrative burden, with concern that permissions may lapse.

“The COVID19 crisis has significantly delayed works taking place and works starting on site. Although housebuilders are now being encouraged to go back to work, it is inevitable that delays will continue as we adjust to new ways of safe working and permissions are at risk of lapsing. This will cause an unnecessary delay as developers have to reapply for planning permission, impacting our recovery. The Government should act to extend all planning permissions by a year, to remove unnecessary additional bureaucracy.”

The Construction Leadership Council’s Covid-19 task force have drawn up a three-phase rescue plan aimed at safeguarding businesses. The “Roadmap to Recovery” plan is to be phased over two years, beginning with the restart phase which is set to run over the next three months. Each phase is outlined below:

Restart: increase output, maximise employment and minimise disruption (0-3 months);

Reset: drive demand, increase productivity, strengthen capability in the supply chain (3-12 months);  

Reinvent: transform the industry, deliver better value, collaboration and partnership (12-24 months).

On the positive side, the Council sees the construction industry as being uniquely placed to drive the national economic recovery. The industry employs around 3 million people throughout the UK and exports billions of pounds of products and services. With a strong plan in place, they believe they can prevent the industry from lapsing into a longer-term recession.

Here is an extract from the plan:

“The strategy aims to increase the level of activity across the construction ecosystem, accelerate the process of industry adjustment to the new normal, and build capacity in the industry to deliver strategic priorities.”

One of the major tasks among their next steps is to establish four working groups: the Infrastructure Client Group for infrastructure, the Home Builders Federation for housing, the Federation of Master Builders for RMI, and the Association for Consultancy and Engineering for social and commercial infrastructure and construction.

Final thoughts

We’re still dealing with a lot of uncertainty, both across the construction industry and globally as a whole. People want answers to questions like “will it ever be normal?”, but most feel that it will be a “new normal” in some way as yet to be defined.

The reopening and recovery process is expected to take at least two years, which is why the plan laid out by the Construction Leadership Council is reflective of this. On the positive side, they see construction in a strong position to help drive economic growth.

Finally, this whole situation is still very fluid, so look out for updates to the plans that have been released and more government interventions. This very much is an unprecedented time for everyone.