There is still uncertainty of COVID-19’s effect on our economy in the long term. The construction industry was at an complete standstill, with complete shutdowns, employee/contractor furlough, and finances stretched to near zero. The construction industry needs to find new and innovative ways of operating. As industry adapts and innovates, will we see a construction revival and potential boom in the post-COVID world.
As construction projects get back on track, all be it scaled down, they will face new challenges. Construction businesses are reporting supply chain disruptions, social distancing measures and rules, and significant restrictions on project budgets. This presents a unique opportunity for organisations to quickly change their processes, we saw similar changes post-2008 financial disruptions.
As we recover we should expect a heavier reliance on technology, remote systems and automation, drones playing a key part in the industry being more adaptable in the future. Next, we look closer at the possibility of a post-COVID-19 construction revival.
Mobilise, stabilise and return to work.
According to a report from PWC Global, when the pandemic ends, E&C companies will face a new world. The marketplace will change, as some national governments will be eager to invest in infrastructure to jump-start their recovery, and others may face new resource limitations. Portfolios will also change, with both public- and private-sector project owners placing a new emphasis on sustainability and resilience. There has been evidence of this with the UK Governments ‘build build build’ message.
The message is clear from the Government, but how do you gauge your readiness to respond? Supporting construction organisations with their response to the ongoing impact of corona-virus (COVID-19) PWC gathered practical insights and guides together in one place. From updates on what the latest Government response will mean for your business, to podcasts and more on where to focus your strategy over the coming weeks and months.
Secure supply in the short term
- Tactical scenario planning. Assess levels of inventory, capacity of available resources, and goods needed to respond to immediate requirements. Develop and analyse scenarios that account for demand uncertainty and potential supply chain challenges.
- Secure essential resources. Compile schedules of essential resources, materials, and products required for business continuity. Beware of the less obvious risks further down the supply chains. Plan to mitigate price spikes in the event of a capacity contraction.
- Mitigate operational and programme risks. Plan action to manage residual risks that cannot be eliminated. Based on a risk assessment, discuss rescheduling or de-scoping of work with the client and project team. Review relevant contract clauses. Consider if any changes can be made that will support business continuity, for example extensions of time and revised payment terms, or even direct financial support for critical suppliers.
Accelerate the recovery
- Accelerate supplier management. When the crisis subsides, active leadership and strong supplier relationships will be essential to re-establish work programmes and to clear backlogs as quickly and efficiently as possible. Clear, reliable demand signals, advanced orders, capability development, and improved payment terms are all levers to consider.
- Refresh business continuity management plans. Review and update the pre-existing business continuity plans for readiness to accommodate future shocks. Include tools such as home working infrastructure and emergency command and control structures. Consider the maturity of a business continuity approach when selecting new suppliers.
Prepare for a post COVID-19 world
- Embed resilience. Consider the various options for embedding future resilience, such as redundancy (increased stocks, spare capacity, and supply competition), resistance (automation, so shocks no longer have an impact), and improved recovery (rapid response protocols). Commercial mechanisms can also be used to increase reliability, for example via improved payment terms which reduce suppliers’ cashflow exposure.
- Strategic supply chain mapping. Implement a whole-system approach to create strategic supply chain maps for critical programmes and spend categories. The maps can be used dynamically to identify possible points of failure in the event of future shocks and enable strategic category management. These steps will allow buying organisations to be more informed about barriers to innovation, efficiency, and competition in their supply chains.
- Digitise supply chain management. The implementation of smart forecasting and analytics will enable more effective decision making. Cloud-based systems using advanced analytics to manage strategic supply chains will enable organisations to evaluate the effectiveness of existing resilience measures, identifying additional mitigation steps where needed.
A Changing Industry
Post-COVID-19 construction trends include higher prefabrication levels, a rise in site surveying drones, and an increase in off-site construction. With the acceleration of site shutdowns in recent months, some workers are no longer able even to reach their job sites, paving the way for remote surveying with drone technology.
Further on-site safety regulations is likely to hinder site productivity, leaving businesses attempting to plug these gaps. Companies that were able to rebound from the 2008 financial crisis were at the forefront of diversifying their portfolios, reallocating resources, and cutting costs by investing in new technologies. This period provides a great opportunity to growth and expansion, businesses that quickly change direction will see these returns in the long run.
Economic levels for construction aren’t projected to reach 2019’s height until 2023 at the earliest. Going forward to position your company for the best possible economic outcome. We recommend investing in new technologies early that will aid your remote employees, increase productivity, and offer a sustainable option to those working from home. Investing now in drone technology consultations to ensure your business integrates right first time and for the long term is critical.