Continuing your business “as usual” is impossible after COVID-19.
Continuing your business “as usual” is impossible after COVID-19.
It is not an exaggeration to say that this novel coronavirus pandemic has brought the global economy to its knees. With governments all around the world implementing strict lockdown measures to slow down the spread of the virus, the world is partially paralysed.
Unfortunately, businesses are nowhere near prepared to handle the impact of the COVID-19 pandemic. According to Gartner’s recent business continuity survey, only 12% of organisations are highly prepared to deal with the novel coronavirus. The study points out that even if companies have policies in place to deal with such risks, they are not activated until it is too late. Organisations tend to not take the risks seriously until they manifest fully.
The construction industry, along with all other sectors in the world, will never be the same because of the COVID-19 pandemic. Here are some of the ways the novel coronavirus crisis will reshape construction.
A lot of industries have adopted remote work arrangements for the past few years already. With the rise of web conferencing and other collaboration tools, many business owners have allowed their employees to spend a few days of the workweek to skip the commute and work from home. Some even have employees working from across the globe through a remote work setup.
Before the COVID-19 pandemic, many construction business owners were reluctant to adopt a flexible work arrangement. Companies preferred the traditional office work arrangement for those not working on the field.
Unfortunately, the current health crisis has made remote work a necessity if a business wants to continue operations while still complying with social distancing and stay-at-home orders. While construction site workers still need to work on the field, office roles such as those in procurement, client relations, and human resources will have to be fulfilled remotely. When business owners realise the benefits of remote work—from increased productivity to better work-life balance—it will inevitably pave the way for the acceptance of remote work as a viable work arrangement in construction.
The construction industry is still one of the least digitised sectors in the world, second only to agriculture. Contractors tend to be averse to using digital technology for meetings and conferences, instead opting to take the long drive to meet clients or setting a schedule to talk to employees in person. There wasn’t any real incentive to invest in a virtual alternative, especially when clients and other project participants were willing to continue the traditional way of meeting.
But now that travel is prohibited, almost all work meetings are done online. Video conferencing platforms like Zoom and Google Hangouts have made it possible to talk to clients and employees with more or less similar cadence as a regular face-to-face meeting. They have all the benefits but without additional travel expenses and wasted time due to commute. Virtual conferences will likely be embraced fully by construction businesses beyond COVID-19.
The payroll department, normally situated in the back office, has been thrust into the limelight because of the COVID-19 crisis. It is now apparent how critical it is to provide compensation and support to employees as strict community quarantines are placed. Because of the pandemic and the consequent economic difficulties, it has become challenging for the payroll department to distribute salaries and wages to employees on time, or at all.
As construction companies formulate business continuity plans, it is the perfect opportunity to revisit payroll policies and implement changes to make them more efficient. For instance, companies that depend on bank checks and physical forms need to find other means to distribute payment. Payroll needs to have a solid digital infrastructure with remote accessibility features. If payroll is only accessible through office computers, it will be impossible to distribute salaries during the crisis.
Aside from this, payroll should be able to adapt to legislative changes immediately. Because of the COVID-19 pandemic, governments had to issue new guidelines on compensation, including new filing deadlines, work-time reductions, and rules on employee leaves, to account for the lockdown. The payroll department should be able to incorporate these guidelines quickly to prevent any payment issues.
The pandemic has highlighted the shortcomings of our healthcare system. News about hospitals going over their capacity and shortages in personal protective equipment is quite common as the crisis reaches its peak. Unfortunately, there is no vaccine yet for COVID-19 as of this writing and the only way to slow its spread is through proper hygiene.
For this reason, we will see a bigger emphasis on health and hygiene in existing safety practices on construction sites. Companies will put in place specific policies that will slow down the current as well as future pandemics, including social distancing measures and the use of face masks. Hygiene facilities will need to be better equipped to encourage employees to practice regular handwashing. These will eventually be formed as habits that will linger even when the crisis is over.
Force majeure provisions and impossibility of performance clauses are considered boilerplate provisions and are standard inclusions in a contract. However, the COVID-19 crisis has stressed the importance of these clauses, especially in construction projects. As many contractors face several disruptions and delays, they may be unable to fulfill their end of the contract. Only these provisions will be able to give them a reprieve to do the work at a later date or even cancel the job altogether.
The presence of these force majeure provisions and impossibility of performance clauses is critical in a crisis. When the novel coronavirus pandemic ends, construction business owners will want to revisit their contract creation process. They need to ensure that these provisions will be able to address crises like the COVID-19 pandemic should they happen in the future.
In the pre-pandemic, globalised world, the construction sector enjoyed the financial benefits of international sourcing. Using sophisticated tools, demand planners were able to forecast when a company needed to reorder supplies through a global logistics network. And then the COVID-19 pandemic caused major shifts in the construction supply chain worldwide. The lockdown measures have caused demand planning to be predictable as many producers abruptly shut down.
In response to this, company leaders will need to reassess the current supply chain model and incorporate local sourcing to cushion against disruptive situations similar to the pandemic. Local suppliers are typically more reactive than their counterparts who are far away. They will be able to adjust immediately in response to the changing situations during a crisis.
The COVID-19 situation is unprecedented in many ways. However, it is crucial that construction businesses never lose sight of the future and how the crisis will reshape the industry. As we all deal with the impact of the pandemic, we should take this situation as a learning opportunity and identify the things that need to be changed for the better.
About the Author:
Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors, subcontractors, and material suppliers with late payments. Handle.com also provides funding for construction businesses in the form of invoice factoring, material supply trade credit, and mechanics lien purchasing.