COVID-19: Impact, opportunities in construction markets

With uncertainty still pervading the built environment due to the Covid-19 pandemic, professionals have continued to throw light on the challenges and opportunities in the construction markets.

They say, the key factors to be cognizant of are impacts on labour force availability, the disruptions to construction component supply chains, specifically from manufacturers in the worst- affected countries, and claims.

The Africa Association of Quantity Surveyors (AAQS) in its new publication ‘Embracing the New Normal’, said all factors have the potential to cause substantial construction delays and project cost overruns into 2021.

“Despite the unforeseen nature of the COVID-19 pandemic, contractors could still be contractually responsible for delays or cost overruns on their current projects. It is expected that both contractors and owners will be carefully reviewing contracts to identify where contractual rights and duties exist under the conditions caused by the virus’ spread,” according to SNC-Lavalin’s Atkins, a consultancy firm.

It recommended that owners review their contracts and take specific note of any force majeure provisions that allow for work to be suspended or terminated when certain extenuating circumstances arise.

The firm said: “In some cases, opportunistic claims may be made, but the impacts of COVID-19, particularly on supply chain disruptions, are sufficiently broad and many claims will be valid.”

However, experts were emphatic that the COVID-19 pandemic and its attendant effect on markets and commercial activity are presenting a range of challenges to the construction industry.

On Nigeria, they argue that the overall impact on the industry is dependent on the severity and length of the crisis. Essentially, the uncertainty surrounding the duration and severity of this crisis make it hard to anticipate how a recovery could unfold for the industry.

They believe that some construction projects will be delayed, and some canceled, as a result of the impacts of COVID-19 on the companies and governments that commissioned them. The compounding effect of plummeting oil prices would be directly felt in the planning and execution of public sponsored projects.

Additionally, the effects of possible weakening of supply chain and bottlenecks of equipment and materials required for construction activities must be anticipated.

Setting the tone for the discussion, AAQS President, David Gaitho urged member countries to advise government on Covid-19 response infrastructure, relevant economic stimulus packages to the built environment.

He wants them to begin continuous professional education to members and students through webinars as well as giving technical advice to select panels convened by trade organizations.

Ajanlekoko

Expounding on the potential short and long term impact on the consultancy firms, President, Commonwealth Association of Surveying and Land Economy (CASLE), Mr. Joseph Ajanlekoko said that in the short run, most firms will be cash-trapped as payment of fees are dependent on progress of work, while current on-going jobs may be aborted – leading to job losses and there may be compensation for stoppage or cancellation of contract.

He explained that in the NIQS Consultancy Services Agreement clause 20.0 – It seems certain that firms can claim for delays arising out of extension of time and possibly reasonable reimbursement under force majeure.

Under 1.0 Conditions of engagement (definitions and interpretations) force majeure – disease epidemics is included as a force majeure.

Similarly, in the long-term, there would be loss of job patronage as clients will be slowing down on new projects, and reduction in number of staff will become inevitable as firms restructure to reduce their losses. He said, firms will need to spend more on digitalization and re-equip for the new challenges as well as on insurance premium, which will go up due to high risk.

In this scenario, he said multi disciplinary approaches will become inevitable, and if firms want to survive, consultancy firms need to divert into sustainability matters; that has to do with human environment.

“My overseas partners ARCADIS have diversified into climate change issues and consultancy work on COVID-19. They are offering service on COVID-19,” according to the past president of NIQS.

The construction industry which is usually used as a barometer of the economic well being of any nation suffered what one can call asphyxia – a major feature of the COVID-19 pandemic, design and build should be pursued vigorously, while new competences will evolve and adoptions of latest technologies including drones to be brought into practice.

Ajanlekoko advised the institute to seek for tax exemption for firms and for the government or Central Bank of Nigeria (CBN) to reduce interest charges for this year.