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Lasting effects of COVID-19 on the UK construction industry

Business Life 27-07-2020

AWM speaks to construction industry professionals to find out how they have been impacted by Covid-19, and what they might expect in the immediate and long-term future.

The future remains uncertain for the construction sector. Build UK and the Civil Engineering Contractors Association (CECA) warned that the UK construction industry is set to become ‘dramatically and severely affected’ from coronavirus.

“We have faced a pandemic with very strict guidelines and restrictions in place about movement, work, health and safely. Within that, the construction industry was being told by the government that it should continue working,” says Rupa Lakha, Partner at law firm Charles Russell Speechlys LLP. “Whilst in theory you’ve got an operational industry, the working restrictions and immediate impact of Covid-19 meant a huge risk of delay and disruption to projects.  There will also be longer term consequences, not only in relation to the successful delivery of existing projects, but in relation to broader issues including procurement strategy and risk management.”

We ask these industry professionals about the impact of Covid-19 on their business, and what the future might hold.

CONSTRUCTION

Chandni Vora, COO, Vascroft Contractors Ltd

 

“What lies ahead is truly uncertain. Our business has been forward planning for the impact of Brexit 12 months ago, foreseeing the lack of resources and manpower, but this turn of the tables is out of the ordinary.  The whole ecosystem of our industry has been impacted.Construction was one of the industries that was a necessity, hence there was no official lockdown issued by the government.  This proved to be very difficult. We had to rethink our strategy, put our people and their wellbeing before project progress and deliverables.  The health and safety of our personnel is key and hence we decided to close almost all of our sites during the lockdown.

The industry has had to change working practices by encouraging working from home, site progress meetings conducted virtually.  New technologies are also being embraced to limit the impact caused by the current pandemic such as site walk arounds, video images and updates recorded to clients.

In term of long-term effects, Vascroft’s niche market has been the high end luxury hospitality and residential market. Due to the downturn in tourism and the hospitality industry, developers have been reluctant to invest. So, to ensure continuity of business, we have had to look at our resources and future pipelines of work and accept projects in sectors that we have previously worked in such as commercial and community projects.

Looking to the future, the industry will need to provide more flexible working space so guidelines can be adhered to.  Recruitment will be a challenge as labour rates have gone up considerably thanks to the implementation of new health and safety procedures to help fight off the virus. Interesting times ahead, and ensuring that we strike the balance will be challenging for all industries.”

DESIGN

Pritesh Lad, Founder, St James Interiors

 

“For us in luxury joinery, demand has remained quite consistent over this period. The information we are getting back from agents that we’re talking to, as well as architects and interior designers is that work is going to be concentrated more outside of London. Enquiries have indeed slowed down within central London, but on the plus side, there’s more attention on the outskirts of London on the commuter belt. I believe that in the next 12-18 months the prices of homes in these areas may go up because people are looking for estates in more rural, suburban areas.

I personally think Covid-19 has been an opportunity to reinvent the way we work. We can view the opportunities that arise from this and be ready for them. Particularly for our industry, people have had more time to research craftsmanship, design, and the unique aspects of what we do. This means people are starting to gain the appreciation and understanding of traditional British craftsmanship and enhance the industry, attracting younger people to consider it as a career.”

LAW

Rupa Lakha, Partner, Charles Russell Speechlys

 

“As a law firm, our priority has been to support our clients and address the early challenges posed to the construction industry by the lockdown.  At the outset, the industry required guidance. Government advice was initially difficult to navigate—though we are in lockdown, the Business Secretary advised for construction to continue. Our clients needed clear advice on how to navigate the latest developments with the pandemic, alongside their contractual obligations in relation to ongoing projects. For instance, if you are a contractor, you have a contractual obligation to carry out the works, to meet the deadline to hand over the project. If you stop working or progress falters because your workforce is no longer able to come to site, or indeed the materials you ordered are now delayed, who bears that risk?

Construction professionals will need to work out how to restart, not just from a practical and safety point of view, but from a contractual point of view. We will hopefully see parties being more reasonable with each other and working in a way that those kind of delays and disruptions to the project will be managed and negotiated. This has taught us that pandemics happen and everybody is now starting to accept that they are likely to occur again. I think that will shift the landscape as to how risk in relation to pandemics is negotiated between a contractor and a developer.”

CONSTRUCTION

Georgie Doble, Development Manager, L+R Hotels

 

“We have managed to keep all of our UK construction projects open throughout, with a vast effort to navigate the unprecedented situation. From a construction perspective there have been inevitable delays – from product supply and transportation of goods from the continent, to labour restrictions / shortages on our sites. Re-planning our London projects has been the most challenging, to ensure there are safe systems of work in place for tight and constrained development sites whilst focusing on programme and the ‘new normal’.

We are a nimble developer and procure the majority of our work directly with contractors. We have our ‘ear to the ground’ as issues emerge and look to minimise disruption by resequencing works were possible. Commercially, we have re-evaluated our payment terms to mitigate our risk, particularly for deposit payments, and have taken the opportunity to redraft our standard contract provisions to define a Relevant Event specifically for pandemics.

Looking ahead, boosting construction’s productivity is key to supporting the UK’s wider economic recovery. We hope that there will be further impetus from Boris Johnson’s newly announced planning policy reform to boost the residential sector and stimulate infrastructure. We are long overdue a revival of the High Street and hope these planning reforms will be the catalyst for change. The key will be to maintain an entrepreneurial attitude to seize the opportunities in the coming months as the UK embarks on its recovery.”

 

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