COVID-19 Possible Impacts on Construction Industry
March 20, 2020
It’s no secret that COVID-19 is affecting all industries. As a contractor, you may be wondering if the construction industry and number of projects will slow down this month. It is important to lay out all the possible negative and positive impacts that the coronavirus could have on the construction industry, as well as giving guidance on what a prudent general contractor or subcontractor will do in these situations.
The possible negative effects in the construction industry from COVID-19:
· Supply Chain Will Be Affected – Many factories worldwide have been shut down during this pandemic which will cause shortages or delays in building material, such as lumber, drywall, plumbing, electrical fixtures, and mechanical equipment resulting in delays in construction.
· Banks May Tighten Lending Practices – In uncertain economic times, banks become risk adverse. There may be fewer projects getting funding until the economy shows signs of improvement.
· Project Owners may get nervous and postpone new construction or slow down planned projects. Uncertainty in the economy will result in projects being on hold.
The possible positive effects in the construction industry from COVID-19:
· Increase In Available Skilled Labor – Prior to this outbreak, there was a huge shortage for skilled labor, especially in MEP (Mechanical, Electrical, Plumbing) trades. With projects potentially slowing down, skilled labor may be more readily available allowing subcontractors to take on new projects from new general contractors (GCs) that they wouldn’t of had resources for before.
· Low Interest Rates – With historic low rates, contractors can finance more projects and cover operating expenses with lines of credit.
· Government Stimulus – The Federal and State governments are looking to pass unprecedented stimulus packages to boost the economy and get everything back on track quickly. Expect large investment in the infrastructure across the country.
Next Steps to Stay Ahead of the Curve
The best advise we can give during these uncertain times is to be very proactive and bid more. In today’s technology age, bidding from the comfort of your home could not be easier. A web-based pre-construction tool like PlanHub can help connect you to bid projects. As we personally witnessed during the great recession, the construction companies that continued to aggressively bid projects were the ones that came out stronger and more successful when the economy improved.