COVID-19 PROTOCOL AND ITS IMPACT ON THE

CONSTRUCTION INDUSTRY IN AUSTRALIA

Dr. Toong Khuan CHAN

Melbourne School of Design
7 February 2022

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I. INTRODUCTION
II. BORDER CLOSURES, SOCIAL DISTANCING AND
LOCKDOWN
III. HEALTH RISKS AS CONSTRUCTION SITES, SUPPLY
CHAIN DISRUPTION AND CONSTRUCTION CONTRACTS
IV. GOVERNMENT RESPONSES – ASSISTANCE &
STIMULUS
V. OPPPORTUNITY FOR CHANGE

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I. INTRODUCTION – INDONESIA AND AUSTRALIA COMPARISONS

INDONESIA AUSTRALIA
Land area 1,904,569 km2 7,692,024 km2
Population 270 million (2020) 25.7 million (2021 est.)

GDP US$ 1.247 trillion (2022 est.) US$ 1.68 trillion (2022 est.)
GDP per capita US$ 4,538 US$ 64,895
Construction US$ 91 billion (IDR 1,272 trillion, 2018) US$ 278 billion (AU$ 360 billion)
Output
Workers 1.0 million (permanent) + 8 million (casual) 1.1 million
Share of GDP 10.67% 8.9%
Government 6.34% (10-year bond rate) 1.06% (10-year bond rate)
Bond Rate
Source: wikipedia
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 I. INTRODUCTION INDONESIA-AUSTRALIA COVID-19 CASES

No local
First spike Second spike
transmission

Source: https://ourworldindata.org/coronavirus/country/australia?country=~AUS
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 I. INTRODUCTION INDONESIA-AUSTRALIA COVID-19 CASES

Omicron

First spike

No local
transmission Delta

Second spike

Source: https://ourworldindata.org/coronavirus/country/australia?country=~AUS
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 I. TIMELINE OF COVID-19 SPREAD IN AUSTRALIA

Source: Guardian Australia 6

 I. INTRODUCTION INDONESIA-AUSTRALIA COVID-19 CASES

State of Emergency 16-Mar-2020

Borders closed 20-Mar-2020
Lockdown 25-Mar-2020
Eased 12-May-2020

Metro lockdown 08-Jul-2020

Eased 08-Nov-2020

Source: Guardian Australia 7

II. STAY AT HOME RESTRICTIONS

30-Mar-2020 (again from 8-Jul-2020) – Stage 3 restrictions:

Only 4 reasons to leave home:
• Shopping for food and supplies
• Medical care and caregiving
• Exercise and recreation
• Study and work – if you can’t do it from home
• Restrictions do not apply to the building and infrastructure sectors

02-Aug-2020 – Stage 4 restrictions in Melbourne:

• Curfew 8:00pm to 5:00am
• Limited to 5km from home
• Restrict infrastructure construction to 50%, building construction to 25%

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III. CONSTRUCTION INDUSTRY

• Building industry with

support from the
government
developed their own
Guidelines and
Response Plan
• Minimize and avoid
the closure of any
construction site

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III. CONSTRUCTION INDUSTRY

• Measures to be implemented to assist in providing a safe and healthy work

environment
 Screening workers coming to site (no close contact, no symptoms)
 Workplace Mapping (Records taken on day/time/location of work)
 Physical Distancing (Safe distances in work, transit and break areas, shift pattern, stagger start)
 Hygiene (Hand washing, cough etiquette, hand sanitizer, soap, bins, waste management)
 Shared Tools, Plant and Equipment (avoid shared tools, plant and equipment)
 Cleaning and Disinfecting (clean and disinfect amenities and meal areas, personnel hoist, door handles)
 Personnel Hoists (face mask for occupants in hoist/lift, sequence of entering/exiting, schedule)
 Personal Protective Equipment (face mask until 6 Dec 2020)

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III. CONSTRUCTION INDUSTRY

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III. CONSTRUCTION INDUSTRY

• Measures to be implemented to assist in providing a safe and healthy work

environment
 Common Areas (limit time in common areas, staggered meal breaks, separate work groups)
 Inspections (appoint COVID Marshal to support site compliance and provide advice to all)
 Travel (limit on number of persons in vehicles, wear mask in vehicles unless travelling alone)
 General Communications (communication materials in various languages, informed, engaged, message
in 16 languages available, Toolbox/Site induction talks to include COVID safety. )
 Vulnerable workers (higher risk – older, aboriginal, compromised immune systems, hoist operator,
cleaner)
 Temperature screening (if above 37.5C, not allowed to enter, rest and retested in 30 minutes, then test
with ear thermometer. If above 37.5C, seek medical attention.)

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III. CONSTRUCTION INDUSTRY

• Employee Relations
 Worker required to look after children (carer’s leave, long-service leave, in accordance with Enterprise
Agreement)
 Directed by Government to temporarily close a building site (must be on Dept of Health direction only,
workers redeployed elsewhere, work from home, some paid leave)
 Stand down workers without pay (follow Enterprise Agreement, Fair Work Act amended to permit a
qualifying employer to use JobKeeper Program)

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II. CONSTRUCTION SITES

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III. CONSTRUCTION SITES

The Age Newspaper (31 July 2020): The

"Beyonce" tower, a skyscraper construction
site in Melbourne's CBD, is in lockdown after
a dozen cases of COVID-19 were confirmed
among building workers.

The outbreak at the 780-apartment Premier

Tower site on Spencer Street has prompted
construction giant Multiplex to immediately
halt work for a full "hospital grade" clean.
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III. CONSTRUCTION INDUSTRY

• Stage 4 restrictions commenced 16 Aug 2020

• Large-scale construction site – more than 3 storeys high, or larger than 1,500 m2
floor size, or office or commercial project.
 No more than 25% of baseline daily workforce or 5 workers, whichever is higher.

• Small-scale construction site – Not a large-scale construction site

 Only 5 workers onsite plus a supervisor at any one time
 No more than 1 worker per 4m2 of enclosed workspace
 Limit movement of workers between different sites (max 3 different sites per week)

• Critical Infrastructure Projects continue at normal workforce levels

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III. CONSTRUCTION INDUSTRY

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III. CONSTRUCTION INDUSTRY

• Stage 4 restrictions commenced 16 Aug 2020

• Stage 4 restrictions eased on 28 Sep 2020 – until 02 Jan 2021
• Large-scale construction site
 No more than 85% of baseline daily workforce or 15 workers, whichever is higher.

• Small-scale construction site

 No more than 1 worker per 4m2 of enclosed workspace
 Limit movement of workers between different sites (3 different sites per week)

• Critical Infrastructure Projects continue at normal workforce levels

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III. CONSTRUCTION SITES

• Employers have a duty to provide and maintain, so far as is

reasonably practicable, a working environment that is safe
and without risks to the health of employees
• Some activities that may pose a risk of exposure to COVID-
19 can include:
• travelling in personnel hoists and lifts
• work that requires employees to be in close contact with others
• using shared tools or equipment
• sharing facilities such as bathrooms, kitchens and communal break
areas.

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III. CONSTRUCTION SITES

• Agreed guidelines between unions, employers, industry associations and government Chief Health
Officer

• https://www.mbav.com.au/covid-19-general-resources

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III. CONSTRUCTION - SUPPLY CHAIN DISRUPTION

• Minimize costs, reduce inventories, and drive up asset utilization

Jan-Feb 2020 July 2020

Chinese manufacturers shut Restrictions in Melbourne
down in early 2020 Deliveries delayed
 1 to 2 month delay Number of workers reduced

Mar-May 2020
China resumed production
Shipping cost increase and
frequency reduced

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III. CONSTRUCTION - SUPPLY CHAIN DISRUPTION

“China is the anchor driving the development of intraregional trade in Asia”, McKinsey

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III. CONSTRUCTION - SUPPLY CHAIN DISRUPTION

Key Performance Indicators (KPIs) Pre-COVID COVID in China COVID in COVID-AU-2

Australia
Order lead-times for Chinese products 2.0 - 2.5 2.5 - 3.5 2.5 2.5 - 3.0
(months)
Delivery times from China (days) 21 (1) 23 - 35 (2) 23 - 35 (2) 23 - 35 (2,3)

Local order lead-times (weeks) 1 - 2 (4) 1 - 2 (4) 2 - 3 (4) 4 - 6 (4)

Local delivery times (days) 2-3 2-3 3-5 3-7

Exchange Rates (AUD:CNY) 4.84 - 4.88 4.88 - 4.08 4.08 - 5.05 4.93 - 5.06

Customs Clearance (days) 1-2 2 - 3 (5) 2 - 3 (5) 2 - 3 (5)

Shipping Costs (US$ per TEU) $740 - 929 $753 - 949 $753 - 1,082 $1,094 - 1,315

Notes: (1) 14 days port-to-port; (2) includes 14-day vessel quarantine; (3) containers not returned within 7-days will incur
extra charges; (4) items that need to be manufactured may take up to 4 to 6 weeks; (5) delays for x-ray scans.

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III. CONSTRUCTION - SUPPLY CHAIN DISRUPTION

Fluctuations in shipping cost for a

standard twenty-foot equivalent
unit (TEU) from the port of
Shanghai to major ports in
Australia.

• US$940 pre-COVID
• US$753 20-Mar-2020
• US$1,529 25-Sep-2020

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III. CONSTRUCTION - SUPPLY CHAIN DISRUPTION

Movements in the currency

exchange rates in excess of 20%
during the period.

Australian builders reported that

their contracts were denominated
in AUD with their Chinese
suppliers (AU builders not
impacted by the drop in AU$)

• AU$1 = CNY4.80 pre-COVID

• AU$1 = CNY4.08 16-Mar-2020
• AU$1 = CNY4.86 28-Sep-2020
• AU$1 = CNY5.00 25-Jan-2021

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III. CONSTRUCTION - SUPPLY CHAIN DISRUPTION
Risks
• Disruptions in production in CN
• Delays in shipping
• Increase in shipping costs
• Loss from foreign exchange
Impact of disruptions in China
• Two week delay when
epidemic was in China
• Rise in demand for local
products
• Asymmetrical impact on
projects
• Test of the stability,
robustness and resilience of
the SC
• China and Australia parts of
the supply chain recover at a
different rate
Timing of local pandemic outbreaks
• Impact of local lockdown is
more severe
• Greatest impact during the
prolonged lockdown
• Greatest risk may not be
from the originating point of
the pandemic (China) but
local (Melbourne)
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III. CONSTRUCTION CONTRACTS

• Force majeure – most AU contracts do not have FM clause, or if included, wouldn’t

capture a pandemic. Would still have to mitigate the effects of the pandemic on its
ability to perform its obligations under the contract. Relief is typically only available
for the duration of the actual delay arising out of the event.
• Frustration – must be a delay so significant to make the performance of the
contract impossible. A mere delay would not be sufficient to frustrate the contract
• Changes in regulations – most likely claims for delays and extension of time, but
uncertain how extra expense of health screening, PPE and delays will be
compensated. “Losses lie where they fall”.

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IV. GOVERNMENT RESPONSE – JOBKEEPER PROGRAM

• Eligible employees paid $1500 per fortnight

• Employers to pay and claim the JobKeeper
payment from the Australian Tax Office (ATO)
• Duration 30 Mar 2020 until 27 Sep 2020 -
extended to 28 Mar 2021 but reduced to $1200,
and $1000 from 28 Mar 2021
• Employers must have suffered reduction in
revenues – a reduction of 30% or more if turnover
less than $1b, reduction of 50% or more if
turnover greater than $1b.

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IV. JOBSEEKER PROGRAM (FOR THOSE UNEMPLOYED AND LOOKING FOR WORK)

• Permanent employees who are stood down or lose their

employment
• From late April 2020, your maximum payment rate each
fortnight includes your JobSeeker Payment and the
Coronavirus Supplement.
• Ending 27 September 2020 – extended to 31 Dec 2020 but
reduced to $250, then to $150 from 1 Jan 2021
• Single, no children: $1,115.70 per fortnight: $565.70
JobSeeker Payment + $550 Coronavirus Supplement.
• Partnered: $1,060.80 each per fortnight: $510.80
JobSeeker Payment + $550 Coronavirus Supplement.

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IV. OTHER PROGRAMS

• One-off $1,500 payment for

workers who have been instructed
by the Dept of Health to self-
isolate or quarantine at home
because they are diagnosed with
COVID or a close contact, and
• One-off $450 payment while
waiting for results of COVID test

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IV. OTHER ISSUES

Sept 2021 Union Workers

protested!
Victoria’s building industry will
be shut for two weeks after
violent protests
Hospitals and some ongoing
railway projects will continue
during the shutdown

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IV. FISCAL AND MONETARY STIMULUS MEASURES

• The Victorian Government’s Building Works package - $2.7 billion, creates

3,700 direct jobs (10 new schools, upgrade 57 schools $1.18 billion; upgrade
social housing $500 million; community and tourism $382 million; roads and
rail $382 million; other $280 million)
• HomeBuilder, the federal government’s $680 million program - $25,000 to
build a new home or renovate an existing home
• During the 2008 GFC, the Rudd-Gillard government’s $16.2 billion Building the
Education Revolution (BER) scheme was successful in stimulating construction
and delivering jobs
• Talk of a $160 billion federal government stimulus recently – but no details yet.
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IV. STIMULUS MEASURES

• The Australian Government can borrow very cheaply for the next ten years and
should embark on a huge fiscal stimulus to boost economic growth after the
pandemic. Ten-year bond rate is at about 1%.
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IV. GOVERNMENT RESPONSE SINGAPORE
• Large number of
foreign workers placed
on Stay-Home Notices
(SHN)
• Living in Malaysia or
dormitories

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IV. GOVERNMENT RESPONSE SINGAPORE

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 V. OPPORTUNITY TO IMPROVE OR DISRUPT THE INDUSTRY

RECOVERY UNDERSTAND BUSINESS CONTINUITY TRANSFORM

If stimulus package is More importantly, how to Anticipating incidents that How to transform the
large, the construction build resilience in the will affect functions and industry?
industry will recover and industry? processes.
thrive. IT, BIM, block-chain,
Need to examine the Respond in a planned and contracts,
We will still need structure of the industry rehearsed manner. supply chain and global
infrastructure, homes, and how we currently trade,
schools, hospitals, and operate. A few issues: Do we need to implement prefabrication,
maybe fewer offices, fragmentation, business resilience plans? structure of the
shopping malls, hotels. construction companies, companies,
risks, finance, build-to-sell vs build-to-
rent,

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V. INDUSTRY STRUCTURE TODAY – FRAGMENTATION

Construction

Product Boeing 737 Commercial Building

Designer Boeing Architects + Engineers

Finance Boeing + Banks Developer + Banks

Technology Boeing + Partners Architects + Engineers + Builders + Suppliers

Manufacturing Boeing + Partners Builders + Suppliers

Sales and Marketing Boeing Developer

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V. INDUSTRY STRUCTURE TODAY – PREMIERE TOWER

Source:
https://www.dezeen.com/2015/0
7/06/premiere-tower-beyonce-
inspired-skyscraper-melbourne-
elenberg-fraser/
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V. INDUSTRY STRUCTURE – IMPLICATIONS FOR CONSTRUCTION

No one single
entity that controls Lower barriers to
the output – entry – many small
expertise companies, not
dispersed across financially strong,
many professions

Many company Companies

failures – lack of compete based on
expertise, lack of price – not on
understanding of innovation or
the risks quality

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V. INDUSTRY STRUCTURE TODAY – THE CONSTRUCTION COMPANY

People business: Finance: Risk: Technology: Profits:

no equipment, Cash flow is king Risk averse; Not willing to Small profit
no machinery, Delegate risk to invest in margins;
very few assets; suppliers and technology; Always looking to
very few manual subcontractors grow revenues
workers;
mostly
professionals
V. MOVING AHEAD – IMMEDIATE ACTIONS

Business
Resilience -
Identify potential
events
Assess likelihood of
occurrence of the
event, predict impact
on the organization

Put in place plans to deal with

such occurrence, and initiate
training and preparedness

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 V. BUSINESS CONTINUITY MANAGEMENT

Risk analysis Business Business Test and Program

Strategy
and review impact analysis continuity plan exercise management

Identify threats Impact on Determine Formulate a Implement test Maintain

through a risk organizational appropriate detailed BC and exercises currency of
analysis, ability to strategy to plan to indicate to highlight plan through
review internal continue to safeguard resources and errors or regular review
operations, operate, interests capabilities omissions, of risks and
external business required verify if business
operating disruption, resources are impacts
environment financial accessible,
consequences available and
adequate

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V. IMPROVE INDUSTRY PERFORMANCE

Improve • Productivity is optimal for current structure

• But low compared to manufacturing
Productivity • More prefabrication or modern methods of construction

Increase Profits & • Many companies are small or medium sized enterprises
• Provide business and finance training
Sustainability • Encourage changes to procurement

Reduce • Examine value chain

• Increase barriers to entry (regulation, capital requirement,
Fragmentation professional workforce)
More
prominence
Local Jobs and • Engage local workers, train local staff, apprenticeships
linked to construction contracts
since COVID
Manufacturing • Use local materials and value add (at least 90% to be AU)

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V. RECENT INNOVATIONS

• Use of IOT technology

for supply chain
management
• Example: Ynomia and
Probuild Construction

44
V. RECENT INNOVATIONS

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 V. RECENT INNOVATIONS

• Use of VR
technology
for site
inspections
• Example:
Builder at the
Holiday Inn
Express
project,
Collins St

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V. RECENT INNOVATIONS

• End-to-end supply
chain information
• Established in 2017
• Series A $5.85 million
funding, values the
company at $30
million

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V. RECENT INNOVATIONS

• End-to-end
supply chain
information
• MATRAK
• Video 4:13

Watch interview on YouTube: https://youtu.be/N8Iz8Sefetw

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V. RECENT INNOVATIONS

• Modern Method
of Construction
• Example: Builder
at the Holiday
Inn Express
project, Collins
St

50
V. RECENT INNOVATIONS

• Modern Method
of Construction
• Example: Builder
at the Holiday
Inn Express
project, Collins
St

51
V. RECENT INNOVATIONS

• Modern Method
of Construction
• Example: Builder
at the Holiday
Inn Express
project, Collins
St

52
V. RECENT INNOVATIONS

• Modern Method
of Construction
• Example: Builder
at the Holiday
Inn Express
project, Collins
St, 33 levels
• Video 2:46

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 V. RECENT INNOVATIONS

• Video 2:46

• https://youtu.be/ZenY
3tBtMgc

54
V. RECENT INNOVATIONS

• Modern Method
of Construction
• Sync Bathroom
Pods
• Video 2:16

55
 V. RECENT INNOVATIONS

• Modern Method
of Construction
• Sync Bathroom
Pods
• Video 2:16

• https://youtu.be/YKlSOwQ0E20

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CROSS LAMINATED TIMBER
MID-RISE TIMBER
BUILDINGS

Larger panels with openings cut into them may be more

cost effective that a structure made up of lots of smaller
panels framing around openings

(Note grain direction of lintel panels)

Source: Wood Solutions

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MID-RISE TIMBER
BUILDINGS

Shear walls orientated in Y work

together to resist lateral loads in Y.
Floor plate is stiff in-plane, but
flexible out-of-plane. So, movement
compatibility of the shear walls is
ensured in Y.
The floors span in Y so the shear
walls are non-loadbearing.

Source: Wood Solutions

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MID-RISE TIMBER
BUILDINGS

Shear wall arrangements

The walls share load based on
stiffness but do not, as shown, work
compositely so global overturning is
resisted by local overturning of each
shear wall contributing.

Source: Wood Solutions

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QUESTIONS

If you want a copy of this presentation or if you have any questions, contact me:

• Dr. Toong Khuan Chan

• Email: tchan@unimelb.edu.au
• Mobile/WhatsApp: +61 449 684985
• LinkedIn: linkedin.com/in/toongkhuan-chan-8608585

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