Successful building projects typically hinge on the alignment of three factors: schedule, budget and scope, with built-in contingency measures to mitigate against any risk or disruptions. The coronavirus, however, has sparked global concerns around free movement, health, and the manufacture and supply of goods and materials.
The rapid spread of the coronavirus across borders and oceans has sent precautionary ripples in relation to our reliance on stable supply chains, manufacturing capabilities and Just-In-Time stock levels in the context of a global market. This (over)reliance on a global status quo has exposed large-scale vulnerabilities that may have a significant impact on our relationships with our customers, clients and suppliers, as well as how we conduct business going forward.
The building and construction industry may be affected by the indirect consequences of the coronavirus: a breakdown in the supply chain, slow production recovery, reduction in manpower and logistical issues are just a few of the vulnerabilities the industry will be facing unless the spread of the virus and associated market anxiety can be curbed.
The impact of the outbreak across industries will vary – some sectors may be completely unaffected whilst others will already be feeling the pinch. In anticipation of the predicted annual slowdown over the Chinese New Year, many of the larger building and construction companies will have stockpiled certain materials, for example steel. However, the global disruption to the supply chain means that the buffers may not be enough and there is no certainty as to how long the disruption will last.
The movement of manufactured goods and materials has slowed over recent weeks to the point where ports are closed to containers and trucks are unable to cross borders. This will most certainly have an impact on the building and construction industry: if alternative materials cannot be sourced or are similarly unavailable, construction schedules will overrun and so will budgets.
There are some precautionary measures that can be taken by businesses in the building and construction industry to minimise risks and manage any inevitable consequences that may result from this current epidemic:
- Update health and safety policies and procedures for your workforce in an effort to keep your workforce safe from possible infection;
- Manage customer and client relationships and expectations – inform customers and clients in advance of any expected delays to enable them to manage expectations from their side;
- Review your contracts – have your lawyer review any schedule, default, penalty, and force majeure clauses relating to delays, etc.
The coronavirus has forced businesses to reflect on a number of issues, including the effects of a breakdown in the supply chain, slow production and logistical problems, all of which can negatively impact the building and construction industry. The industry can use the lessons learnt from this epidemic to review certain business practices, including possible contingencies. Although no business can prepare for every eventuality, it is possible to mitigate against disastrous outcomes, so as to continue successfully completing building projects.