While the global construction industry had a 3% anticipated growth rate for 2020 ahead of the pandemic, this forecast was reduced as COVID-19 spread worldwide. There are many ways the global pandemic has affected the global construction industry, and here we cover the highlights.
Infrastructure projects related to mass transit are moving along quickly in many regions due to their diminished traffic. Airports, rail, and highway projects have been able to accelerate work since the pandemic began.
In an additionally positive note, private owners in many regions have been taking advantage of low interest rates to begin projects rather than defer them.
As Arcadis reports in their 2020 Global Construction Disputes Report, “For projects that are shutdown, delayed, and in the queue, governments and public authorities will likely be aiming to advance spending on infrastructure projects as soon as possible to reinvigorate the economy.”
However, while some infrastructure projects are seeing accelerated completions, there have been many more construction halts and suspensions in 2020.
Projects during the pandemic fall into three categories:
- Continuing projects
- Suspended projects
- New projects or existing projects restarted
Continued projects are projects that continue through the impact of COVID-19. Just because a project continued in 2020 does not mean that it hasn’t been greatly impacted by the pandemic– there will be impacts related to social distancing, resource and materials shortages, and/or restrictions or changes due to government orders and regulations.
Suspended projects are the projects that were in progress and are suspended because of the pandemic. These projects were stopped because of the pandemic, likely for a multitude of reasons– financial, labor and/or supply and material shortages, etc. It will be important for owners and contractors to have a clear understanding of what cost and schedule impacts were because of the pandemic at the time of shutdown.
New projects or existing projects restarted are what happens when a new project is started or an existing project is restarted during the pandemic. These projects will all undoubtedly go through major changes to their original schedules, and likely even major changes to their overall original contracts due to decreases in labor and supplies. The projects’ schedules and costs will be impacted, and it will be imperative for these project organizations to have an efficient and effective change management tool in the deck to help manage all the change orders and new processes.
What impacts have been seen by projects across the regions due to COVID-19?
As mentioned, there are and have been construction labor shortages, difficulties and delays in manufacturing materials and supplies, as well as shipping delays, due to the pandemic. Some companies are ordering materials extra early to try to account for certain items and getting them on-time. Though this is affecting material costs, because the demand is now higher, so are the prices.
Some organizations have struggled financially with the pandemic, while others are having their best year yet– it all varies greatly.
How Project Organizations are Adjusting to the Pandemic
Leading organizations are doing what they can to set themselves up for success amidst the pandemic. They are using this time to pivot and make changes like auditing their processes, undergoing digital transformations, and restructuring their processes to be more pandemic-resistant. Because we are not yet through the pandemic, we will not fully know the impacts on projects until 2021 or 2022, but we are seeing organizations doing their best to adapt while taking care of their employees.
The global pandemic is and will continue to strengthen these three construction industry trends:
- Standardization – while projects themselves are each unique, they all have things in common, so it is crucial to set up good parameters.
- Digitization/automation – using technology to automate and become more efficient.
- Modularization – more and more work is now taking place in factories and warehouses opposed to on-site. For example, housing units are being built in clean, safe conditions before taking them to “more dangerous” or “risky” work sites.
Learn more about how the global pandemic is affecting the construction industry in our on-demand webinar, “The Construction Industry in the Post-Pandemic World”.