GOING CONCERN

Construction companies and businesses primarily deals with construction of projects like
building of various types of infrastructures and roadways. Due to the outburst of Covid-19
pandemic, this industry is quite affected as well in terms of its ability to continue as a going
concern entity. Some of the issues that the construction industry may encounter and could
have a negative impact to its important processes are: (1) Default on contract or project notices
(2) Adjustments on construction schedules (3) Project suspension and termination. In this
sense, construction company may not be able to realize their expected revenue from the
agreements with their clients which are made prior to the pandemic occurrence. It could be for
the reason that there has been significant delay on the agreed schedule of construction or
disruptions with the procurement of supplies and the government, as we already know, is really
implementing strict guidelines like curfews which may prolong their operations. In the worse
case scenario, the company may suffer from a vital loss when their client decides to withdraw
from the construction agreement. Therefore, without their income the entity may face threats
of business closure and indebtedness to its suppliers.
ASSET
In construction company’s viewpoint, the major asset affected by the continuous disruptions
and termination of some projects could probably be the company’s main supplies and
equipment necessary to complete the construction. There could have been possible supply
chain bottlenecks of equipment and materials that includes structural steel and glass could
cause project delays in currently funded projects or reduced spending on future ones. On the
other hand, receivables from their advance services or construction from clients before the
pandemic may also be affected since their client might not have the ability to pay due to the
financial instability because of the pandemic’s disruptions in economy. Thus, being unable to
collect its receivables may also delay converting it to cash which is also an asset necessary to
sustain if business operations.