26 May 2020 6 min read

Coronavirus outbreak: business continuity & the state of the construction industry in the new reality

 

COVID-19 affected the whole construction industry and brought forward the well known problems it has, highlighted in the face of a pandemic, remote working being one of them. What is the state of the industry now and how will the future look?

Britain's construction industry contributes 117 billion pounds to the UK economy - that’s 6% of the total economic output - and provides 2.4 million jobs. The Coronavirus outbreak has brought it all down. Construction companies are now trying to keep afloat, trying to catch some air to allow them to breathe and not collapse completely. Challenges are even stronger, as nobody can predict when the end of the Coronavirus pandemic will be. The full repercussions will potentially be seen in months to come, as for now we can see only the tip of the iceberg.

Key challenges in the current situation

Work absences, sickness and closures are the keywords of the month. While many businesses in all industries offer the option to work remotely, the construction industry requires healthy physical workers to be on-site. It is not a viable option for many to stay at home (even when they are not feeling 100% healthy) as within the industry there are many workers that get paid by the hour and/or have no paid sick days included in their contract.

Besides sickness, there is also the problem of public transport - if public transport comes to a halt, many workers will not be able to come to work on time or come to work at all. On the other hand, seeing the metro and buses full to the brim with people, makes you wonder what is the worst case: shutting down public transportation or leaving it to be an infection hotspot?

Construction site closures are the current news focus. In the UK, Barratt Developments, the country’s biggest builder by the number of new homes built, said on Thursday (16.04.2020) that it was furloughing all but 15 % of its workforce and cutting executive pay by 20 % until on-site work restarted. Sir Robert McAlpine, Grafton Group, Multiplex, and Taylor Wimpey are among the latest companies to close their sites and many more are sure to follow.

Were we prepared for remote working?

Leesman surveyed more than 700000 employees worldwide and revealed that of the 19906 working in the UK construction industry and civil engineering space, 49% have no home-working experience, compared with 52% of overall respondents globally. They have also revealed that the ones in the industry that do work from home, they only do it occasionally: 91% do so for one day/week or even less. Only 32% of these “once in a while” remote workers have a dedicated room to work from.

Both the employees and the employers in the construction industry are out of their depth when it comes to properly setting up the ability to work from home. It is key now to leverage and adopt tools that would keep the companies afloat - cloud based management software which is on the market can help you immensely. Keep in mind that there is no “one size fits all” solution and during your decision-making process you need to involve your team - by keeping them informed you have a much higher chance to implement the tools properly and have the people working with it daily.

The Coronavirus pandemic has placed many companies on freeze/lockdown or diminished the staff working on site. But you still need to work in order to make a living, so why not try and find a way in which more employees can work from home and still do everything you need them to do? Modern technology offers some solutions, like cloud based ERP systems that allow your teams to have a steady stream of communication, essential for building projects - be they large or small - and it will allow them to work remotely at any location and at any given time. All they need to have is a stable internet connection and a device from which they can log in - mobile, tablet, laptop or desktop be it Android or Apple Tech. By investing in a cloudbased management software your team will be able to stay at home and breathe easy, and you will be able to run the business as usual.

Digitalization in the face of crisis

Data from McKinsey in 2019 ranked the construction industry as one of the least-digitized industries (just above agriculture and hunting). Digitalization inside this industry has only slightly improved over the years: results from the 'Digitisation Index for SMEs 2018' show that the industry obtained 51 (out of 100 max) index points - just a 2 point increase from the previous year!

The statistics also show an increase in the usage of digital Building Information Modelling (BIM). Construction is a flourishing industry and it will develop further in the foreseeable future, also with the external push of the pandemic. We now understand, more than ever, the need to be prepared to work remotely and have everything you need in the cloud. A cloud based management software creates a way for you to build a more cost-effective business model. 10% of digital leaders have reported exceptional improvements with digitalization and the achievement of an index value of 88 points. Regarding customer acquisition, these digital leaders are also ahead of other construction companies with a satisfaction rating of 79% compared with 48% throughout the rest of the industry. Innovation always pays off in the long-term!

What can SMEs do to survive Coronavirus?

COVID-19 has become a global emergency and an economic crisis is knocking on our doors. We are facing grave challenges when it comes to all the industries but the construction industry will be one of the most affected. The lack of digitalization, the lack of opportunities to continue business operations through remote work will bring many companies down. SMEs all over the world are forced to take immediate and drastic measures to counteract the spread of the virus in the workforce.

The UK has been busy and created the Coronavirus Job Retention Scheme, where all UK employers will be able to access much-needed support during this crisis. There is a temporary package of measures supporting public services/people/businesses:

Deferring VAT and Income Tax payments

A Statutory Sick Pay relief package for small and medium-sized businesses (SMEs)

The Coronavirus Business Interruption Loan Scheme offering loans of up to £5m for SMEs through the British Business Bank

A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans

The HMRC Time To Pay Scheme

It is crucial that the SMEs understand the gravity of the situation and look towards the future, thinking of ways they can overcome the hardships to come. Construction ERP solutions can be of great help to the construction industry. Technology helps us adapt and shape the way we work, the way we do business. Employees now have the opportunity to learn new skills and even change their mindsets about working remotely and using more technology. Now is the time for the SMEs to reflect on their goals and think outside the box: digitalization for survival!

The Construction Industry will have a remote workforce as the norm over time. The COVID-19 pandemic showed us that we are not yet ready for that, but with this hard test that we are facing now, we can understand the need for digitalization. Embracing a new work environment by overcoming adversity will keep you on top of the game. Digitalization is the future and the construction industry is the “Sleeping Beauty” that has just woken up to realize this! It is time to up your game and look into the future and the construction ERP solutions available on the market!

 

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