Pandemic Highlights New Priorities for Construction Companies
In response to the global COVID-19 pandemic, many construction companies have halted or delayed projects to support mitigation efforts. And eager to slow the rate of transmission and protect employees, businesses across all industries are revaluating the need for office space — further disrupting the construction industry and magnifying the pandemic’s impacts.
While questions remain on whether teleworking will become the new norm, there has been a noted slowdown in new construction projects since the outbreak began. As health and safety concerns increase, regulations evolve, and the demand for new projects shift, construction companies must adapt and respond to new business challenges to protect their people and, ultimately, their bottom line.
Adapting to a New Normal
Throughout the pandemic, the construction industry has continued to operate with modifications, and reductions in on-site worker hours are now being reversed. However, shifting employee preferences, recognition that many functions can be carried out remotely, and financial strains are prompting companies to cut spending — and, often, forego major construction projects.
As states continue to lift restrictions and businesses begin to resume normal operations, contractors will need to adapt. The first priority must remain your people, but actions taken to protect their health and safety can lead to increased costs and longer construction timeframes. As such, it is essential for construction companies to document all additional costs and consider reevaluating existing contracts with project owners.
In navigating these new business challenges and expenses, contractors are likely to face diminished revenues and difficulty collecting funds, which can severely affect cash flow and liquidity. To preserve capital and protect their solvency, construction companies must shift their focus to new priorities, including:
- Maximizing liquidity to meet financial obligations.
- Identifying and monetizing available assets quickly and efficiently.
- Communicating openly and regularly with financial stakeholders and project partners.
- Leveraging data to identify early warning signs of customer payment defaults.
- Holding discussions with peers to identify any additional unforeseen risks.
Today, a main differentiator for construction companies is their ability to adapt to the changing reality and identify new opportunities. For example, employers that require their people to be on-site will likely need to make adjustments to allow for physical distancing on their premises; that could necessitate the conversion of open plan offices. Other spaces, including public transportation hubs and airports, will also likely require updating.
While challenging, construction companies that can identify and capitalize on such opportunities will be ahead of their peers.