Professional Documents
Culture Documents
by
HASSAN AKBER*
(CE-020/19-20)
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Contents
1 Abstract................................................................................................................................................ 4
2 Introduction ......................................................................................................................................... 4
3 Literature Review ............................................................................................................................... 5
3.1 Construction Industry In Pakistan ............................................................................................ 5
3.2 Situation of Covid in Pakistan ................................................................................................... 6
3.3 Impact of Covid 19 on Construction Industry ......................................................................... 6
3.4 Financial Impact of Covid 19 ..................................................................................................... 7
3.5 Financial Impact of Covid 19 on Construction Industry ........................................................ 8
3.5.1 Job Losses ............................................................................................................................ 8
3.5.2 Suspension of Ongoing Projects and New Projects .......................................................... 9
3.6 Incentive By The Government ................................................................................................... 9
4 Research Gap and Contributions .................................................................................................... 11
5 Objectives........................................................................................................................................... 11
6 Methodology ...................................................................................................................................... 12
6.1 Study Design .............................................................................................................................. 12
6.2 Financial Impact of Covid 19 ................................................................................................... 12
6.3 Tackling with Financial Impact ............................................................................................... 12
6.4 Incentive Provided By The Government ................................................................................ 13
6.5 Questionnaire Design ................................................................................................................ 13
6.6 CONDUCT OF SURVEY ........................................................................................................ 13
6.7 Questionnaire Sample ............................................................................................................... 14
6.8 Respondent’s Profile ................................................................................................................ 21
7 Results ................................................................................................................................................ 23
7.1 Financial Impact ....................................................................................................................... 23
7.1.1 Closure of Offices , Sites and Suspension of Ongoing Projects .................................... 23
7.1.2 Reduction of Revenue and Impact on Payment for ongoing Projects .......................... 24
7.1.3 Impact on Starting new Projects and Recruitment for Fresh Graduates .................... 25
7.1.4 Uncertainty of survival ..................................................................................................... 26
7.2 Tackling With Financial Impact .............................................................................................. 27
7.2.1 Strategies adopted to Deal with Financial Impact and Cash Flow Problems.............. 27
7.2.2 Effect of This Financial Impact on Employers ............................................................... 28
7.2.3 Reduction In Expense By Working From home ........................................................... 29
7.3 Incentive Provided By Government , Suppliers and Other Financial Institution ............. 30
7.3.1 Tax Reduction ................................................................................................................... 30
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7.3.2 Loan Incentive ................................................................................................................... 31
7.3.3 Opening of Construction Sites Early ............................................................................... 32
7.3.4 Relief Provided by or Suppliers and Banks .................................................................... 33
8 Analysis .............................................................................................................................................. 34
8.1 Financial Impact ....................................................................................................................... 34
8.2 Dealing With Financial Impact ................................................................................................ 34
8.3 Effect of This Financial Impact on Employers ....................................................................... 35
8.3.1 Working From Home........................................................................................................ 36
8.4 Incentive provided By government and Others. .................................................................... 36
8.4.1 Tax Incentive ..................................................................................................................... 36
8.4.2 Loans Provision From Government ............................................................................... 36
8.4.3 Relief Provision By Suppliers and Banks........................................................................ 37
8.5 Lessons Learnt .......................................................................................................................... 38
9 Conclusion ......................................................................................................................................... 39
Figures
Figure 6.1 Company Type ........................................................................................................................ 22
Figure 6.2 Company Size ......................................................................................................................... 22
Figure 7.3 Revenue Reduction ................................................................................................................. 24
Figure 7.4 Impact on Payment ................................................................................................................. 24
Figure 7.5 Impact on New Projects ........................................................................................................ 25
Figure 7.6 Impact on Recruitment Process............................................................................................ 25
Figure 7.7 Uncertainty of Survival .......................................................................................................... 26
Figure 7.8 Dealing With Financial Impact ............................................................................................. 27
Figure 7.9 Dealing With Cash Flow Problem ......................................................................................... 27
Figure 7.10 Laying Off Employees Permanently or Temporarily ........................................................ 28
Figure 7.11 Laying Off permanent Staff or Daily Wages...................................................................... 28
Figure 7.12 Reduction In Salaries ........................................................................................................... 29
Figure 7.13 Reduction In Financial Impact By Working From Home ................................................ 29
Figure 7.14 Satisfaction With Tax Reduction ....................................................................................... 30
Figure 7.15 Tax Reduction Provided By The Government ................................................................... 30
Figure 7.16 Awareness About Loan Scheme .......................................................................................... 31
Figure 7.17 Willingness To Take Loan ................................................................................................... 31
Figure 7.18 Opening of Construction Sites Early .................................................................................. 32
Figure 7.19 Relief Provided By Supplier ............................................................................................... 33
Figure 7.20 Loan Payment Relief By Banks ........................................................................................... 33
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1 Abstract
The outbreak of Coronavirus has not only effected all walks of life . As result of this
pandemic lockdown was imposed resulting in economic and financial recession for number
of industries including Construction Industry. In Pakistan too Construction industry too had
to Financial impact of this pandemic. The aim of this to study the Financial Impact of this
pandemic on the Construction Industry. Three major aspects of this study were Financial
impact of this pandemic on firms related to the construction , how they faced it and finally
incentive provided by Government to face this impact. Study was conducted through
questionnaire being responded by Various stake holders of the industry. It Showed that
although Construction industry did faced some financial impact but overall these impact was
not severe due to early opening of the industry. This study will help the construction
industry and government to devise such strategies to help them in future.
2 Introduction
The outbreak of coronavirus disease-2019(COVID-19) has severely affected national and
global economies. Various enterprises are facing different issues with a certain degree of losses.
Construction industry, which is one of the important sector the national economy Pakistan ,
is also facing a unique challenge due to the spread of COVID-19 s, and the subsequent
economic effect of a nationwide lockdown .
The outbreak of Covid -19 pandemic has adversely effected all the sectors of industries and
economy . Construction industry was no exception in this regard. Especially a third world
Country like Pakistan which is already struggling economically Construction industry is one of
largest provider of jobs to the workforce of this country therefore any financial impact on this
industry means that it will have adverse effect on life of many professionals, workforce that are
related to it
Therefore its is vital to understand financial impact of this pandemic on the construction
industry and how to cope with the financial impact of this pandemic . Also it important to know
that what lesson they learn from this pandemic so that they can face this type of situation in
future whenever necessary.
The objective of the study is to access in what ways this pandemic has affected financially on
the different stake holders of construction industry. Following Stake holder will be looked
upon
• Consultants
• Architects
• Contractors
• Builders
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These stake holders are the major stake holders that re involved in the construction industry . All
these stake holders were effected financial by the covid 19 pandemic as lock down was imposed
due to which majority of construction activities were halted . During the pandemic, the situation
drastically deteriorated by firstly shortage of construction material supply, which then impacted
the construction industry
3 Literature Review
Construction Industry In Pakistan
The construction industry is an important sector of the economy and has multiple backward and
forward linkages with other sectors. The industry contributes significantly to socio-economic
development and employment and there is a consensus on certain common issues that plague the
construction industry in developing countries.
In Pakistan construction industry is an important sector of the economy and has multiple
backward and forward linkages with other sectors. The industry contributes significantly to
socio-economic development and employment and there is a consensus on certain common
issues that plague the construction industry in developing countries. Pakistan is a developing
country that is currently enjoying relatively strong growth in construction activities. Today,
construction is the second largest sector in Pakistan’s economy after agriculture. Roughly 30-
35% of employment is directly or indirectly affiliated with the construction sector
The present government, realized that the engineering infrastructure, housing and building
sectors are the backbone of any country's economy and play a vital role in the development of
the country, has increased resources to further expand the basic infrastructure in the country. The
effect has initiated a number of development projects which have led to increased demands of
building and construction activities in the country. The government has acknowledged in the
latest Economic Survey that the strengthening of the country's infrastructure is a basic
imperative for sustaining growth momentum. During the last two years, the government has
taken various budgetary and non-budgetary measures which are now yielding positive results.
Construction activity in Pakistan is booming; demand for construction-related materials has
surged. Many national and international real estate developers have launched or launching large
construction projects in Pakistan which has further accelerated construction activity in the
country.
Reference
Rizwan Farooqui, Syed M Ahmad ,Sarosh H Lodhi (2008)) “ Assessment of Pakistani
Construction Industry – Current Performance and the Way Forward “
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Presently there are many stake holder sin involved in construction industry in Pakistan like
• Consultants
• Contractors
• Builders
• Government Regulatory agencies
• Marketing Companies
• Vendors
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The impact of the disease on society and economy can be witnessed from the lockdown of cities
all over the world, labor mobility restrictions, travel bans, airline suspensions, and most
importantly slowdown of the economy. COVID-19 crisis went global from February 21 to March
24,2020 and still the number of cases is growing rapidly every day.
This pandemic is having a substantial effect on construction projects; however, the legal
implication varies from contract to contract, nation s to nations
During the pandemic, the situation drastically deteriorated by firstly shortage of construction
material supply, which then impacted the construction industry. Following the spread of the
virus, many countries started implementing several measures to reduce movement of people, and
that has mainly obstructed the construction because it requires on-site work and every project
member must be available to work, check, and monitor all the work activities.
However, in the construction industry, all the workers and technical engineers need to nearly
work on-site either to perform activities or to monitor the work is done correctly (Financial
times, 2020). The construction industry is far different from other industries which typically
requires on-site involvement of all the project members.
Reference
Dr. Yaser Gamil ,Abdulsalam Alhagar (2020) “The Impact of Pandemic Crisis on the Survival of
Construction Industry: A Case of COVID-19 “
Like in many countries Pakistan also imposed lockdown in the early days of this pandemic. As
result of this lock down only essential industries , shops were allowed to be open for the public.
As a result majority of construction sites were shut down due to following reasons
• Non Availability of Transport
• Restrictions on Movement of People
• Non Availability of Material
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Further, according to International Labor Organization (ILO), almost 25million people around
the globe could lose their jobs (loss of workers' income of as much as USD 3.4 trillion) (ILO,
2020c).
COVID-19 will have a more profound effect in developing countries that will make it much
more difficult for them to implement effective stimulus without facing binding foreign exchange
constraint
It has been reported that Pakistan has lost one-third of its revenue and exports dropped by 50%
due to COVID-19 outbreak and lockdown(Junaidi, 2020). Economists warn of recession amid
virus lockdowns in Pakistan (Naqvi, 2020). Similarly, the World Bank also warns that Pakistan
might fall into a recession (World Bank, 2020b). Due to the ongoing crisis caused by the
COVID-19 pandemic, Pakistan's real GDP growth in FY20 is expected to contract by 1.3% as
national and global economic activity slowdowns abruptly during the last few months of the
fiscal year (World Bank,2020b). Further, in case the outbreak of COVID-19 deteriorates and
continues longer than expected, Pakistan's real GDP growth for FY20 may contract by 2.2%
before just recovering to 0.3% growth in FY21 (World Bank,2020b)
According to the Pakistan Labor Force Survey (2017–18), the unemployment rate in the country
is 5.8% (Sohail, 2018). However, due to the ongoing crisis and lockdown, the unemployment
rate is expected to reach8.1% during the fiscal year 2020–21 (Siddiqui, 2020).
(Shafi et al. 2020 –“ Impact of COVID-19 pandemic on micro, small, and medium-sized
Enterprises operating in Pakistan”)
The Covid 19 Pandemic had far reaching financial impact on every sector of economy including
the construction industry. Stake Holders related to construction industry have been greatly
impacted financially due to this pandemic . However extent of this financial impact may vary
from according to different types stake holders.
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domestic workers)who work in different industries, services, and agriculture, and rely on daily
wages to meet their needs. According to the author, around 04 million people are working on a
daily wage basis in Karachi alone, besides, it is estimated that around 04 million individuals are
also working in Punjab province. These daily wagers have been hardest hit by the lockdown.
(Shafi et al. 2020 - Impact of COVID-19 pandemic on micro, small, and medium-sized Enterprises
operating in Pakistan”)
SPECIAL PACKAGE
In an attempt to maintain a balance between a full lockdown and the minimum necessary
economic activity to succor livelihoods the government has allowed the incentivized re-start of
construction activity in the urban areas of Pakistan starting 14th of April, 2020.
At the heart of this measure is the stated aim of creating work opportunities for those rendered
unemployed due to the outbreak.
The Government of Pakistan is giving the status of industry to the construction sector.
Investors in the construction sector during the current and the next fiscal year 2020-21
would not be asked any questions about the source of their wealth and they will be allowed
to bring the investment onto their tax returns. This will act as a de facto Tax Amnesty
Scheme.
Needless to mention that this is a huge concession and on its own will be at zero cost to the
investor i.e. no tax to be paid to regularize this wealth.
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3. Construction entities associated with the Naya Pakistan Housing Scheme
Construction sector will be paying a fixed tax and if it is associated with Naya Pakistan
Housing Scheme then 90% of that amount will be reimbursed. (Please see point 6, below,
too.)
A subsidy of Rs. 30 billion is being provided to the Naya Pakistan Housing Scheme.
During FY 2020 anybody selling his/her principal residence will not have to pay Capital
Gain Tax. Extension to FY 2021 is under consideration.
Government had also decided to bring the construction sector in the fixed-tax regime
under which the rate of tax on land and construction would be levied on the basis of per
square yard and per square foot of property respectively.
Further the tax is to be paid evenly over the life of the project.
7. Withholding Tax will be waived-off for Construction Sector (except Steel and
Cement and the organized sectors)
Withholding tax on materials and services has been abolished and only formal sectors like
Cement and Steel etc. would be subject to deduction of tax.
8. Formation of Board
It has also been decided to establish the Construction Industry Development Board (CIDB)
to help promote the construction industry in the country.
9. Parameters of working
To make sure that Corona Virus does not spread, government would specify the
parameters of workings in the Construction Sector so that it did not involve close
contacting. This is particularly true for mega projects to ensure that social distancing was
nonetheless observed.
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Following coordination with the provincial governments of Punjab, Khyber Pakhtoonkhwa
and Sind it has also been decided to bring down the sales tax in the construction sector to
2% through the consolidation of all taxes.
Reference
5 Objectives
• To find out financial impact of Covid -19 Pandemic on Construction Industry
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6 Methodology
Study Design
This study is a cross-sectional investigation which was based on a self-administered online
questionnaire. This questionnaire is based on some factors that we have identified will help us
to identify financial impact of this pandemic on Construction industry. I have Classified these
factors under three main Headings.
• Financial Impact of Covid 19
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Incentive Provided By The Government and Others
During This pandemic Government announced different incentive for construction industry that
I have discussed in Literature review. It was Important to know that construction industry
responded to this incentives and whether they were satisfied with it .
• Opening of Construction Sites Early
• Tax Reduction
Questionnaire Design
The questionnaire was comprised of a total number of 17 questions.
The survey questionnaire had two Parts. The first part in the finalized questionnaire was regarding
respondent attributes, consisting of information mainly regarding the name of respondent, name
of organization in which respondent is working, designation, qualification, location and experience
of the respondents
In the second Part of questionnaire we devised some questions on the basis of factors mentioned
above .
CONDUCT OF SURVEY
Our target audience for this research project will be sending out questionnaire to different
some professionals working in construction industry . Following stake holders of the construction
industry are targeted
• Contractor
• Architect
• Builder
• Consultant
The data were collected by administering an online questionnaire. I reached out to potential
enterprises through a variety of social media platforms such as WhatsApp, Facebook, and
LinkedIn, including e-mails, and invited them to participate in the online survey. Complete
confidentiality was assured to all the respondents so that a large number of enterprises can
participate in the survey.
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Questionnaire Sample
I am Hassan Akber currently doing Masters in Construction Management from NED University
Karachi, Pakistan conducting a research on “Financial Impact of Covid 19 Pandemic on Construction Industry”.
This questionnaire will help in developing the results for our research paper. The aim of the research paper is
to access the financial impact of covid19 pandemic and how different stake holder dealt with it
This questionnaire is an important part of data collection in the project. . It takes approximately 10-15
minutes of your valuable time to answer the questionnaire.
* Required
Part A Bio
Financial Impact of Covid 19 Pandemic on Construction Industry in Data
Pakistan
1. Name *
2. Company Name *
3. Type of Company *
Consultant
Contractor
Builder
4. Designation *
5. Organization Category *
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Small
Medium
Large
1. For How much During This pandemic did your office or sites got closed down *
None
1 Month -3 Months
3 Months- 6 Months
2. How much your revenue was reduced as compared to normal during this pandemic *
None
10-30%
30-50%
None
Some Projects
Majority of Projects
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Not Impacted
Slightly Impacted
Very impacted
1. During this pandemic did your rate of getting new project or starting a new project got
impacted *
Not Impacted
Slightly Impacted
Very Impacted
2. Did this pandemic effected your recruitment process for fresh graduates *
Not Impacted
Slightly Impacted
Very Impacted
3. For how much time of Complete lock down time would have force you to completely shut
down your Company * Mark only one oval.
1 3 Month
3Month - 6 Month
None
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Shut down Business permanently
Shut down Business partially
Reducing administrative expense by working from home
Continue to operate Normally
No or very little financial Impact
None
Any Other Please Mention
Any Other
Any other
2. If you did not layoff or reduce salary of your employees in case of no earning how did you
pay them their salary *
3. If you did layoff you employee were they permanent or on daily wages *
Permanent
Daily Wages
Both
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1. If You did layoff your staff were they were permanently layoff or temporarily *
Permenanatly
2. If Your Staff Worked from Home did it help in reducing financial Impact of this pandemic by
reducing Administrative expense * Mark only one oval.
None
Slightly
Very much
3. Did your Material Supplier provided any relief in payment time period in case of financial
problems * Mark only one oval.
None
Some what
Major
4. If there was any reduction in salary of employee, what was average percentage of reduction
*
10-20%
20-50%
More than 50%
None
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1. Did Government provided any tax reduction to Construction Industry *
Yes
No
Don't Know
Yes
No
3. Were you aware of loan scheme announced by the government to financially assist
companies *
Yes
No
4. Were you thinking of using them in case of financial impact and if not why? *
No Relief
Some Relief
Major Relief
No Loan Payable
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1. What is your opinion of Government Decision of Opening up Construction Industry Early *
They Should not have to closed down construction industry in first place
2. What important financial lessons did your learn that will help you in your future?
Forms
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Respondent’s Profile
Out of all the questionnaire send out to different companies related to construction industry
related to a total of 30 responded to this questionnaire. Following table and charts depicts their
organization Names, type and size type break down.
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Type of Company
7 7
4
12
Company Size
Small, 4
Large, 12
Medium, 14
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7 Results
Financial Impact
7.1.1 Closure of Offices , Sites and Suspension of Ongoing Projects
As expected during the covid 19 Pandemic due to the government restrictions and lock down
construction sites or offices of the majority of organizations that responded were in fact closed
down . Figure 7.1 shows that around 17 % were closed for less than month ,43% were closed
form 1-3 Months,10% for 3-6 Months, 10% were closed for more than 6 months while 20% were
not closed down as shown in figure . Also During lock down as shown in Figure 7.2 Firms
did face suspension or termination of their ongoing projects . However 43% indicated that their
few projects were suspended ,30% claim that their no projects were suspended while remaining
27%respondent’s majority projects got suspended
More than 6
Months
Closure of Offices and Sites
10%
3 Months- 6
Months None
10% 20%
Less Than
1 Month -3 Month
Months 17%
43%
Majority of None
Projects 30%
27%
Some
Projects
43%
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7.1.2 Reduction of Revenue and Impact on Payment for ongoing Projects
Due to closure of the construction sites majority of organization did faced reduction of revenue
as compare to normal . More than 70 % of organization did faced some reduction of revenue
that ranging from 10% to more than 50% as ,While around 26% did not any reduction in
revenue as shown in Figure 7.3 as This was due to majority of organizations faced serious
issues on getting their payments for their running projects as shown . Around 50% of Firms
payments for running projects were seriously impacted, 27% of Firms payments were slightly
impacted while remaining firms payments were not impacted at all as shown in Figure 7.4
Reduction of Revenue
17%
26%
30%
27%
Impact on Payement
Not
Impacted
23%
Very
Impacted
Slighly 50%
Impacted
27%
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7.1.3 Impact on Starting new Projects and Recruitment for Fresh Graduates
One of the main reason of reduction of revenues for companies related to construction was
because of the lockdown imposed there was an certain reduction in acquisition of new
construction Projects or vice versa for builders to start new Construction Projects Around 50 %
firms indicated that rate of getting or starting a new project was very impacted , 40% firms rate
was slightly was slightly impacted while remaining firms did not face any impact at all as shown
in Figure 7.5. Since there companies weren’t getting any new Projects or starting any their
recruitment process of fresh graduates also was impacted . Around 60 % of firms had their
recruitment process for fresh graduates severely impacted , 23% had a slight impact while
remaining did not had any impact at all. As shown in Figure 7.6
Very
Slighly Impacted
Impacted 50%
40%
Not
Impacted
17%
Slighly
Impacted Very Impacted
23% 60%
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7.1.4 Uncertainty of survival
One of biggest fears of any business during this pandemic was uncertainty about their survival if
the complete lockdown continues . This was also major concern for the construction industry in
Pakistan as the lockdown was imposed and construction sites were being shutdown. Figure 7.7
Shows lock down or1-3 months or more would had force majority of firms to shut down their
work . While 23% could have sustain 6 months while only 3% would had survived a year
Unceratnity of Survival
More than
Year
3% None
14%
6 Month -
One Year
3%
3 Month - 6 1- 3 Month
Month 57%
23%
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Tackling With Financial Impact
7.2.1 Strategies adopted to Deal with Financial Impact and Cash Flow
Problems
Almost all the Firms related to construction faced financial problems and cash Flow Problems . It
was important to know that what strategies they adopted to deal with this situation. Figure 7.8
and Figure 7.9 Shows different strategies taken up the firms to deal with financial impact and
cash flow problem
No or very None
3% Dealing With Financial Impact
little financial
Impact
5%
No Cash
Flow Reduction in salaries
Problem, ofemployees, 25%
33%
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7.2.2 Effect of This Financial Impact on Employers
As result of this Pandemic Job Losses and reduction in salaries of the employers was the
major financial impact that effected the global economy. But in Pakistan Fortunately in
Construction Industry did not faced major job losses . However it is important to know
Following Figures below shows the following results
• Where Construction firms did lay off their staff were they were layoff permanently or
Temporarily ,
• The staff they lay off were the permanent employee or daily wages
• . Reduction In salaries of the Employer
Temporarily if
Did not layoff Situation improves
any staff 34%
63%
Both
13%
Daily
Wages
20% Did not Lay
any Staff
54%
Permenant
13%
Figure 7.9 Laying Off permanent Staff or Daily Wages
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Reduction in Salaries
10-20%
27%
No
reduction 20-50%
63% 7%
More than
50%
3%
Figure 7.10 Reduction In Salaries
Slightly
43%
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Incentive Provided By Government , Suppliers and Other
Financial Institution
7.3.1 Tax Reduction
As previously discussed during this pandemic Government announced different incentives like
tax reduction and easy loans for the construction industry help sustain the financial impact of this
pandemic. It is important to know whether stake holders in construction industry had awareness
about these tax reduction ,level of satisfaction to it . Figure 7.15 a shows that that only 33% of
respondent’s claim that government did provided some tax relief while 33% claim of no tax
relief provided and equal were unaware of such measures . While Figure 7.14 shows that
40% respondent’s were not satisfied by this tax relief and only 27% were satisfied
Don’t Yes
Know 34%
33%
No
33%
No
40%
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7.3.2 Loan Incentive
In addition to tax relief Government of Pakistan also announced some easy loan scheme for
private enterprises to support them financially . Figure 7.16 shows that most construction firms
around 67% were aware of these loan scheme provided by government to support them
financially . In addition to this it is important to know that if firms were going through
financial crises were they willing to take these loans to support them financially or not. Figure
7.17shows that around 39% were willing to take these loans while a majority 61% were not too
sure to take these loans
No
33%
Yes
67%
Yes
42%
No
58%
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7.3.3 Opening of Construction Sites Early
Since construction industry in Pakistan is has a major proportion in providing jobs to workforce ,
therefore closing it for very long time could have serious financial impact on work of millions.
There for government of Pakistan took an appropriate decision of opening up the construction
and its affiliated industry early as compare to other. Regarding this decision of government
Figure 7.18 shows that around 50% were satisfied , 20% stated that it should have been opened
up early, while remaining 30% though that it should not have been closed down.
Satisfied With
the Decision
Should have 50%
Opened it
earlier
20%
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7.3.4 Relief Provided by or Suppliers and Banks
Since construction industry heavily depend upon the supplier for the provision of material,
Therefore it is important to know that whether firms got any relief on their bill during this
pandemic . Figure 7.19 shows that only 17% of respondent’s got major relief from their
supplier, while 13 % got some relief. Around 43% of respondent’s suggested that they did not
got any relief., while remaining either don’t deal with supplier or did not face any Financial
problems
In addition to supplier firms in construction industry are also related to banks for their loans and
other financial aspects. Figure 7.20 shows that only 17% and 3% got some or major relief
respectively from their banks, while 47% of firms didn’t get any relief at all. Remaining had no
loan payable towards banks
Some what
13%
Figure 7.17 Relief Provided By Supplier
No Loan
Payable
No Relief
33%
47%
Major Relief
3% Some Relief
17%
Figure 7.18 Loan Payment Relief By Banks
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8 Analysis
After analyzing the data from this questionnaire filled by different stakeholders in construction
industry related to financial impact. Following results can be interpreted
Financial Impact
• Since like other industries because of lock down construction industry was also shut
down but this shut down was not for very long period as government of Pakistan took the
decision of opening up construction industry early. Hence Majority of Firms offices and
sites opened up within 3 months or less. This early opening minimize the financial impact
of this pandemic up to certain extent.
• As evident due to imposition of lock down ongoing projects of firms did got suspended .
However as the result shows Only few projects or in some case No projects of Majority
Firms got suspended . Again it is due to early opening of construction industry in
Pakistan
• There was a significant reduction in revenue for the firms related to construction as
there their payments for ongoing projects and rate of upcoming new projects got
impacted . Due to these reason firms recruitment drive for fresh graduate also got
effected resulting an increase in unemployment rate in the country.
• During this pandemic like other industries firms in construction industry also had some
serious concerns of their survival if this complete lock down continue . Results indicate
that most medium and small sized firm would had to shut down their business if this
complete lockdown would had continued for 3 months and for Large seized firms it
varied from 3 -More than a year.. This indicates that majority of small and medium sized
construction firms does not have enough financial strength to sustain these types of
lockdowns for even . This is because of their lack of financial management
knowledge and education due to which they do not concentrate on making such financial
decisions and strategies that would help them in such sort of situation .
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Working From Home was mostly adopted by Consultants , Architects and in some cases
Builders too Since Consultant and Architects did not have to perform some physical
execution work therefore they can work from remotely very easily.
For Contractors and Some Builders since Construction sites were closed down, therefore they
had to shut down their Partially till further notice of opening of construction sites.
• It was eminent that Most Firms would had to face cash flow problem as there was
reduction in revenue and suspension of ongoing projects. As for the companies that did
face cash flow problems the adopted the following strategies
➢ Reducing Salaries of Employees
➢ Selling Some the assets
➢ Laying off the Employees
➢ Apply for the loan
In adopting these no particular strategy was adopted by the majority of firms.
• Although reducing salaries of their employee would had serious impact on workers
financial condition but it was still better than being laid off. Reduction in salaries was
always the most suitable choice for owners because salaries are paid from earning and if
earning is reduced so is the salary . However there were loan schemes announced by the
government to prevent this also but mostly firms were hesitant to take these type of loans.
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8.3.1 Working From Home
• During this pandemic many firms adopted working from home since offices were closed
down. It is important to know that whether this working from home helped them in
easing out the financial impact of this pandemic on them. However result showed in
majority of cases it only had a slight effect or no effect at all. It was because since firms
had an impact on rate of upcoming new projects therefor working from home could just
help in reduction of administrative expense . If they are not getting any new projects
resulting in reduction of revenue than working from home will be of no use.
• During this pandemic it was important to know that whether government of Pakistan
provided any tax relief to the construction industry . Majority of firms were either
unaware or were of opinion that no tax relief was provided for them . While only 30% of
firms did had some tax relief provided by the government . These firms were mostly
builders that were indeed provided tax relief by the government of Pakistan which can be
attributed to the “Special Incentive Package for the Construction Industry,” which
envisages a tax amnesty for investment made in the construction sector, fixed income tax
regime for the industry, reduction in sales tax on construction material and reduction in
provincial sales tax on construction services. How ever for the majority of firms that did
not had tax relief it was due to these firms were mostly contractors , consultant and
architects that only pay income tax for their firms and in such case no tax relief was not
provided on income tax that’s they did not had significant tax relief .
• Since for majority of firms no tax relief was provided that’s why they were not satisfied
from tax incentive announced in from the government . However for the builders this tax
amnesty scheme was quiet attractive as they now did not have to disclose the source of
the income investing in their construction projects.
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Again this non willingness of firms can be related to lack of financial and economical
knowledges in these firms . Most of these small firms do not have separate financial department
to handle these type of matters or even they do not have even have single person employed for
dealing with financial matters. As for the bigger firms they do have the separate department but
they too just work on routine financial procedure necessary for their firms and do not have to the
authority from their owners to make such kind of decisions
• As the result shows that majority of Firms did not got any relied for their payments to
their suppliers . Although Around 30% did got some relief in which 13% got some relief
while 17% got major relief regarding their payments but in all it was not satisfactory as
a whole for the construction industry to have not gotten the relief that they were
expecting. This is can due to uncertainty of overall situation in which at any time
lockdown could be prolonged or could be imposed again therefor material vendors and
suppliers were also concern about their businesses survival . It was due to this reason
they were hesitant to provide some relief in payment or prolong the credit time for their
clients so that they got could maximum cash to fulfill their needs during the pandemic.
• Banks also have a very important role in Financing and Loan Provision to the
construction industry. But for the majority of Firms that had some loan payable to the
banks as per their response No relief or even extension of payment time was provided to
them . While only 20% of Firms got some sort of relief in which 17% got some while
only 3% got the major relief. This is because since government had already announced
some relief schemes for the construction industry there for banks they had no reason to
provide some extra relief on their behalf. Also since Financial impact on construction
was minimized due to its early opening due to which banks also didn’t provide any sort
of relief.
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Lessons Learnt
• The most important part of this questionnaire was the asking the respondent’s about the
Financial lesson learnt during his pandemic. Out of 30 total 23 responded to this question.
Following were the Reponses
➢ Be Prepared to Work From Home
➢ Always Save Capital For Future
➢ Have Multiple Source of Income
➢ Try to Follow Normal Schedule By Following SOP’s
• Mostly Consultant and Architecture firms emphasized the need to adopt the mode of
working from home. if anything like this happens in the future. They were of opinion
that since this was first instance to have faced this s type of situation therefor for the
future they will be well prepared to work from home in case offices are being closed
down.
• For Contractors and builders they emphasized the need of saving and investing their
capital more efficiently for such kind of situation. They also underlined the need to
have to have other business running other than construction to have an alternate
source of income.
• Firms also emphasized the need to well trained to follow SOP’s for such kind of
pandemic so that if in future such kind of pandemic remerges they will able to
continue their business normally by ensuring that all necessary health and safety
protocols are being followed.
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9 Conclusion
• Many firms especially smaller ones would have faced he harsh reality of shutting down
their firms if this complete lock down would have continued longer. Government should
consider given some exemption to this sector from complete lockdown if such situation
remerges in future as large number of workforce of this country is employed in this
industry.
• Firms especially Consultants and Architecture Firms should train and Facilitate their
Staff and workers to adopt working from home mode in case of such type of pandemic.
Although some firms did adopted this strategy but since it was their first time therefor
they faced a lot of difficulties to adopt this mode of work. Training Sessions should be
held about how to communicate, coordinate with each other in such kind of environment
and usage of software’s that would enable them to work from home more smoothly .
• Firms Should adopt more advance financial management strategies to save their capital
such that it could benefit them in Financial Crises . For this either they should learn
more about financial management or hire someone for their firms. Due to this lack of
Knowledge about financial management most firms especially the smaller and medium
ones were hesitant in taking measures including acquiring loans announced by the
government to support these types of firms to keep their business afloat .
• Since this lock down was not prolong therefor mostly firms which responded did not lay
off their employers and workers . However in such situation where it prolongs job
security of workers become a concern. Therefore firms in collaboration with government
should devised such strategies to keep the jobs of their employees and workers safe at
least till the situation improves.
• Although Government announced easy loan scheme provisions they should run an
extensive awareness campaign to encourage the firms to avail these type of loans to
minimize some of the financial impact.
• For the suppliers supplying construction material government should announced some
relief on duties and other taxes so that these supplier could also provide some relief to
Construction industry regarding procurement of construction material.
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• Daily wage workers are most vulnerable segment of workers in case any job losses. Since
construction industry employ a large proportion of daily wage workers there for
government should form some separate social security institutions or bring them in under
them already established institutes like SESSI( Sindh Employees Social Security) or
EOBI to safeguard their financial interest.
References
• Mohsin Shafi, Junrong Liu, Wenju Ren, 2020 “Impact of COVID-19 pandemic on micro,
small, and medium-sized Enterprises operating in Pakistan”,
Research in Globalization, 2020 – Elsevie
• Gamil, Y. ., & Alhagar, . A. . (2020).” The Impact of Pandemic Crisis on the Survival of
Construction Industry: A Case of COVID-19”. Mediterranean Journal of Social
Sciences, 11(4), 122. https://doi.org/10.36941/mjss-2020-004
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