The COVID-19 epidemic has wreaked havoc on the construction industry, which is very susceptible to economic cycles. On the plus side, because of its ability to generate employment, construction has a lot of potential to drive recovery; in turn, recovery measures may help the sector’s development towards sustainability and digitization. To foster a human-centered recovery of the construction sector from the crisis, tripartite collaboration and social discussion, as well as international labor norms, are essential.
According to analysts, some areas of the building industry were damaged worse than others by the epidemic. Overall construction investment fell $68.4 billion from January to May in 2020, but rose $44.7 billion from May to September, staying around $23.7 billion below January levels. Private residential buildings declined by $49.5 billion from January to May then increased by $71.3 billion from May to September, substantially driving these movements. In contrast, public residential development grew somewhat (+$1.3 billion) from January to September.
- The United States’ gross domestic product (GDP) fell 31% in the second quarter of 2020 and soared 33% in the third quarter, the biggest quarterly decrease and gain ever recorded.
- Residential construction was hurt worse than other subsectors, with expenditure falling $49.5 billion from January to May and then rising $71.3 billion from May to September. The construction of single-family homes accounted for more than 60% of the variation.
- After the lockdowns were removed, the impact of COVID-19 on construction enterprises decreased, with 16 percent having a substantial negative effect in October compared to 33% in April.
- Construction firms with less than five employees were more likely to have a significant negative impact from COVID-19, but they were also less likely to obtain government funding.
The COVID-19 outbreak has thrown many worldwide contractors into one of their most difficult periods. Contractors have seen rapid change as nations throughout the world implemented lockdowns and other restrictions, with many changing their working methods overnight.
According to GlobalData, global construction production is likely to shrink by 3.1 percent in 2020, a substantial decrease from the 3.1 percent gain forecast before COVID-19. Production is expected to fall by 7.3 percent in Western Europe, 1.7 percent in North America, and 0.9 percent in North-East Asia.
Rebuilding the Construction Sector
Contractors have had to try to finish current projects while also protecting on-site workers, adhering to government laws and travel restrictions, and managing supply chain disruptions and project suspensions.
These difficulties have been exacerbated by country-by-country differences in pandemic-related legislation and prohibitions.
Contractors, on the other hand, are accustomed to modifying and adopting various continuity tactics, such as when ramping up for new projects, downsizing in some areas, or responding to altering project timelines. This adaptability has served construction enterprises well throughout the epidemic and will continue to be important in the future.
But there’s good news for companies in the United States. The US Govt have released a provision where business owners can claim their Employee Retention Tax Credits (ERTC). Any businesses that were impacted due to COVID are very well qualified to claim ERTC up to $26000 per employee.
Companies that embrace the current challenges to develop and adopt new processes and capabilities to protect their employees, minimise future project disruptions, comply with government regulations and restrictions, and manage clients and suppliers will be best suited to weather the storm and may even emerge stronger. With the current volatility comes the possibility of long-term good transformation.