Coronavirus : Its Impact on Construction Industry

Just three weeks ago, doctors diagnosed the first case of coronavirus COVID-19 in the US. Since
then, the virus has continued to spread. As of this morning, the virus has been confirmed as the
cause of death for 31 Americans.
In China, more than 3,100 have died of the illness since the outbreak began late last year.
While some construction companies are implementing coronavirus precautions — screening
jobsite visitors for flu-like symptoms, for example — most are business as usual. So when will
the industry begin to feel the effects of the global pandemic?

How China’s health crisis is impacting construction

“Supply chain issues haven’t been reported yet,” says Mandi Kime, Director of Safety at AGC of
Washington. “There are concerns that if the outbreak spreads that we may see complications in
our ability to access supplies — not just sanitizing and cleaning supplies but materials. There
could be workforce issues on the suppliers’ ends — that they can’t deliver products or keep to
their delivery schedules. It’s not going to impact local supply at this point.”
That said, the US imports approximately 30% of its construction products from China. Though
there haven’t been reports of the pandemic impacting supply chains yet, it’s a matter of when
not if.
By late-February, 50,000 construction workers in Hong Kong had been laid off as a consequence
of the coronavirus. Another 80,000 had their hours significantly reduced. A shortage of
materials from mainland China is to blame.
Supply chain delays caused by the impact of China’s aggressive containment measures could
impact construction in the US long after COVID-19 is neutralized.
According to a report in the National Law Review, production lines in China were at a standstill
due to quarantined workers.
It’s reasonable to consider supply chain interruptions as a result of proactive measures in
mainland China. It’s also logical to anticipate delays because of absenteeism.
Still, Kime points out that the 2009 H1N1 (AKA, “swine flu”) pandemic did not affect supply
chains. “You should keep your eye on the supply chain, but we didn’t see issues with H1N1,”
Kime says. “We saw a run on sanitizing supplies and cleaners but no supply chain issues or
projects being shut down or delayed because of the impact.”

Working sick, absences, and closures

While many businesses offer employees options for work-from-home, construction companies
typically require healthy workers to be on-site. And for anyone not feeling 100%, staying home
isn’t always a viable option, especially for hourly workers or anyone without paid sick days.
Beyond a worker’s sickness, emergency protocol within the community can trigger a variety of
challenges. If public transportation halts, many workers may find it difficult or impossible to
show up for work on time – or at all. Additionally, if schools or child care facilities shut down,
working parents may have no choice other than to stay home.
Almost 300 million students worldwide have been impacted by coronavirus-related closures
already.
Construction site closures are going to occur in certain areas. If regions are locked down and
residents quarantined, all construction in the area would have to cease.

How to prepare your construction company and yourself

As with any safety measures, remind workers how to minimize risk on the jobsite.
“You don’t want to have people in close proximity to each other, but you can be on a jobsite
and not be within six feet of each other,” Kime says. “Those who are immunocompromised
should consider whether they should stay home depending on what their tasks are.”
In preparation for increased absenteeism, supervisors should cross-train employees to handle
other functions.
 It can also be helpful to encourage workers to develop contingency plans for child care in the
event of long-term closures of schools and daycare centers.
In addition to clarifying or amending sick-leave policies and encouraging work-from-home for
all employees who can be productive working off-site, construction companies can be proactive
in communicating potential delays due to coronavirus-related issues.
“The important thing to do is communicate potential impacts on schedules,” Kime says. “We
suggest early communication and communication of fact. Let the GCs or owners know, ‘We
have an issue with a handful of people staying home, this is what we expect the delays to be.’
“It could be the case that in the near-future a project owner or GC will say that the risk is too
great to continue work if the site is near to where there are more cases, or close to a medical
facility or an area where the exposure risk is high. “Owners understand what’s going on right
now.”

ROADS & BRIDGES' SURVEY RESULTS ON THE EFFECTS

OF COVID-19 (CORONAVIRUS) ON INDUSTRY
OPERATIONS
Roads & Bridges Media recently surveyed our readership to find out how the ongoing and
accelerating effects of COVID-19, or coronavirus, are impacting the road and bridge
construction and maintenance industry. This report will be updated each week based on trends
and shifts as observed in the survey results.

March 30: The results thus far have been in line with expectations—but also, in unexpected
ways, somewhat surprising.
The primary respondent groups for this survey have identified themselves as:
 From a consulting engineering firm (36%)
 Department of transportation or other gov’t body (30%)
 Contractors (20%)
 Other occupations (14%); these include materials suppliers, testing firms, subcontractors, etc.
As you see below, companies and agencies are taking a plethora of actions to assuage or
otherwise mitigate the impacts or potential impacts of the pandemic. It is uniquely complicated
for people in our industry, as what we do – both objectively and with regard to how governing
bodies are now classifying work – is essential. Thus, construction companies and DOTs alike are
facing incredibly tough choices between keeping the country and its supply routes healthy and
moving, and keeping the crew members responsible for that health healthy themselves.
The most telling response, which came in anonymously, was from one respondent who wrote,
simply: “Stress & anxiety are making it nearly impossible to focus on work.” While we’ll look at
stats here, we ask that you bear in mind the individual human impacts of this pandemic; such
impacts are front-of-mind for R&B editors.
For the most part, mild impacts are being felt and expected (47%), while “sizable” impacts are
being realized by a further 39%; only 8% believe there will be “severe” impacts, and it would not
be conjecture to posit that a good portion of these respondents are involved, in some way or
another, in the supply chain of materials. Nearly one-third of respondents are already seeing
supply chain impacts, and another ~39% see them coming down the pike—sooner, perhaps, than
later.
Overall, impacts are tough to judge thus far; mostly firms and DOTs are anticipating slowdowns
and project pauses, until a firmer grip can be had on precisely how the spread of the virus is, or
can be, contained in various pockets of the nation.
We concluded our survey with an open-ended question to this effect: “Do you anticipate long-
term impacts to the transportation infrastructure and the roads/bridges environment as a
result of the outbreak/resulting economy? For instance, will remote work go mainstream? Will
certain road/build construction sectors experience a severe downturn?”
Below please find a selection of curated responses; respondents’ anonymity has been retained.

While most projects are proceeding on schedule, procurement of new work has slowed down
and new hires are impacted since they cannot enter an office. projects are expected to be
delayed and spending may slow down by public agencies experiencing similar resource
challenges.

Yes. Lower sales tax revenue will impact my City's General Fund and as a result our Streets
Department. A Federal Stimulus Funding Package may offset this impact some, but it will not
completely replace the maintenance and operations funding that is primarily provided through
sales and property tax revenues. I believe my City will have an increase of delayed and deferred
street maintenance in the coming 6 to 18 months.

Remote work might actually improve work with more digital collaboration and BIM software.
On the projects' side, working mostly on government's projects, we are expecting many
resources to be diverted to deal with the outbreak so many projects will be delayed and
cancelled. On the other side, governments used our industry before to quickly open many
positions when unemployment rose. So there is an optimistic scenario in which we will see
more projects as a result of this outbreak.

We established the remote work as part of our business model two years ago. The current
situation and the expected development of the outbrake may force us to make that trend even
more widely implemented.

No we anticipate a robust return when MEDICAL PROFESSIONALS declare it safe and feasible

The greatest concern we have at this time is the impact of a "total closure" or "shelter in place"
type of restriction - so much of our work involves and requires physical presence. There is no
such thing as "virtual road construction" or "virtual soil testing".

I believe that remote work will go more mainstream where it has been effective and efficiently
applied during this period. I believe that lessons learned from this event will be widespread
throughout both vertical and horizontal factors for just about all sectors. With time, we will be
leaner, and more efficient.
Currently no significant impacts yet because construction projects were and are shut down to
winter. There may be impacts once construction begins in May but my agency is striving to stay
on schedule to prevent impacts to infrastructure and economy that would result if volume of
construction work is reduced. IT at my agency is increasing ability and capacity to facilitate
remote access into network. Unlikely that modified working conditions will remain in place
after the threat is over for most employees.

Hard to say everything is changing from day to day and sometimes from hour to hour. We are
having problems with deliveries from subs and suppliers.From pipe to fencing supplies, to fabric
to erosion control materiel's and so on...

This outbreak is going to hurt us, as we are a small construction company, that was about to
begin our seasonal work. But town & city's wont allow that to happen. our work is all outside,
our laborers could meet the 6' rule. I just hope we stay afloat for a bit longer, but winter $ is
going quickly. Very sad situation. Pray for us all.
We will see more people/firms choosing work from home/remotely. The result will be
somewhat reduced traffic on streets and highways and public transportation usage in the near
term. A great opportunity to repair this nation's aging infrastructure. Thank you Roads &
Bridges for being out there for us.

Ways the coronavirus outbreak will affect

construction

Three words stand out to construction attorney Steve Lesser when thinking about how U.S.
contractors should react to the negative effects of the global coronavirus pandemic: Wait and
see.

Lesser, the chair of Becker’s construction law practice, said he thinks the best thing for
contractors to do is nothing at all, as the fallout from the effects of COVID-19 on the U.S. is far
from complete and no one can predict its full impact.

"The smart money rests on the principle that full speed ahead with a planned construction
project does not make business sense,” he said. “Take a breath, slow down and know that
every day may bring more information, and the more information we have the better we can
predict what to do.”
A sense of panic in affected areas is nearly as debilitating as the health effects themselves, said
Lesser, a past chairman of the American Bar Association’s Forum on Construction Law. “Until
people feel more secure it’s going to be a roller coaster of a ride,” he said.

Contractors, of course, are used to risk. From labor shortages and escalating tariffs to the
upcoming presidential election, the industry entered 2020 facing many unknowns, and experts
say the fallout from the COVID-19 virus is one more factor poised to affect construction
firms. Despite the uncertainty, experts predict the pandemic will have ramifications for several
aspects of U.S. construction. These include:

Employee health and safety

First and foremost, companies in affected regions say they are concerned with employee well-
being. The good news is that the risk of transmission for those employed outside the healthcare
sector is low, according to OSHA.

In Seattle — one of the country's hardest-hit areas — there is a great deal of concern given
recent deaths and the closing of many schools and other facilities, Associated General
Contractors of Washington Safety Director Mandi Kime told Construction Dive.

The organization has developed a Toolbox Talk for its members to use to discuss the issue with
their crews. The chapter’s primary advice to contractors is to remind teams to use good hygiene
including frequent hand-washing, covering coughs and avoiding touching your face.

“The basic principles of avoidance that we used for the H1N1 flu outbreak over 10 years ago
applies to this situation,” she said. “My goal is to reduce hysteria and share facts.”

Construction Dive survey; based on multiple responses per person

In addition to physical wellness, contractors are considering mental health, too, because
employers report anxiety among workers as one of the top issues brought on by the
coronavirus. In an informal Construction Dive survey, 70% of respondents noted “employee
anxiety” as their top concern, above material shortages and the prospect of government
shutdowns.

While there have only been a few reports of the virus directly impacting the U.S. construction
workforce, Lesser said it could just be a matter of time before it becomes a bigger
problem. Emergency protocols within affected communities, such as a state-mandated
containment area in New Rochelle, New York, could trigger a variety of challenges. If public
transportation shuts down or schools close, many employees may find it difficult or impossible
to show up for work.

Quarantines and travel bans

To help prevent the spread of the virus, many schools, colleges and businesses have shut
down. Construction companies across the world are considering how they will react to an
outbreak near one of their jobsites or offices.

Balfour Beatty CEO Leo Quinn said the company is ready to close sites and is examining
contractual terms should it have to. Quinn told U.K. media outlet Construction News that while
no projects have halted yet, the firm would consider it when necessary.

“Business does seem to be operating as normal. But again, we're monitoring the situation very,
very carefully,” he said, adding that an outbreak would prompt a 14-day quarantine shutdown.

Other construction companies have put in place rigorous travel guidance for employees. Lask
week, Skanska implemented a ban on international business travel across its entire global
workforce of 35,000 employees and Australian-based contractor Lendlease cancelled all
nonessential business travel, a spokesman told the Syndey Morning Herald.

These shutdowns and bans mean that companies will need to turn to teleworking and other
technologies to keep business running smoothly while employees are at home.

“We’re asking our people to reconsider travel within Australia where meetings can otherwise
be conducted using digital tools, including video conferencing,” the Lendlease spokesman said.

At Crystal Soda Blast, Cordes said, staff will be participating in an upcoming bid walk in the
Seattle area via Skype.
“I’m not sure how we will construct buildings and roadways without physical presence so it will
be interesting to see what possible solutions people come up with for that,” she said.

Material delays

Chinese government containment efforts and quarantines have slowed or shut down factories
in dozens of the country’s cities and provinces, leading to forecasts of a sharp falloff in
production of everything from cars to smartphones, according to the New York Times.

For commercial builders that rely on Chinese-made goods or materials, this could mean higher
material costs and potentially slower project completions, Richard Branch, chief economist for
Dodge Data & Analytics, told Construction Dive.

U.S. builders look to China for everything from steel and stone to millwork and plumbing
fixtures, according to Joe Natarelli, national construction industry leader at accounting services
firm Marcum.

By conservative estimates, nearly 30% of all U.S. building product imports come from China, but
some American construction firms rely on China for up to 80% of their materials, Natarelli said,
because they are less generally expensive.

Supply shortages have already impacted one of the country's largest home builders, Toll
Brothers, which announced last week that shortages of lighting fixtures and small appliances
will delay the sale of 11 homes in California, according to Reuters.

Natarelli is telling his clients to aggressively seek out alternative suppliers in the U.S. or in
countries that haven’t been negatively impacted by major supply chain interruptions.

“To be frank, I haven’t seen a huge impact yet on material price increases but the expectation
of it and the uncertainty around the virus is really scaring folks,” he said.

References:

https://www.ecmweb.com/covid-19/article/21126812/covid19s-impact-on-the-construction-industry

https://www.roadsbridges.com/roads-bridges-survey-results-effects-covid-19-coronavirus-industry-
operations

https://www.constructiondive.com/news/6-ways-the-coronavirus-outbreak-will-affect-
construction/574042/