The impact of COVID-19 on Construction Industry in the United States

The impact of COVID-19 on Construction Industry in the United States

Corona Virus disrupts global market

Global markets have been hit hard by the fast-spreading Corona Virus, and further outbreaks could cut global economic growth in half this year, according to the Organization for Economic Cooperation and Development. As the disease quickly spreads across the world, investors are sounding the alarm in what could plunge several countries into recession. Federal Reserve chairman Jay Powell has even promised taking appropriate measures for the financial market to stay afloat. However, supply chain disruptions are already impacting markets worldwide, and should have ripple effects through numerous industries in March and beyond. China reported factory closures throughout the region in January and February, creating current supply-demand constraints that should be monitored.

The effects of COVID-19 is still on going and no one can foresee its full effect. Contractual workers, obviously, are used to risks on construction sites. From labor shortages to escalating duties to the upcoming presidential elections, the industry entered 2020 confronting numerous questions, and specialists state the fallout from the COVID-19 infection is one more factor ready to influence construction firms. In spite of the vulnerability, specialists predict the pandemic will have many consequences on construction industry.

Nearly 4740 cases in United State have been confirmed of coronavirus out of which 4638 are active cases, 17 are recovered cases and 85 people have died due to this outbreak. These numbers are increasing at an exponential rate and can be tracked by the Microsoft Covid Tracker.

There are various aspects that affect the construction industry and should be taken into consideration due to the Corona Virus Outbreak. Below are some points:

Health and safety of the employees

Most importantly, organizations in influenced areas state they are worried about worker prosperity. However as per the reports of OSHA the possibility of transmission for those employed outside the healthcare sector is low.

Countries all over are shutting their borders, restricting travel of citizens and tourists from outside, locking down cities and banning gatherings. Today, Donald Trump has recommended the citizens of U.S to limit group gatherings to less than 10 people for precautionary reasons. There has been a lot of awareness given to contractual workers regarding cleanliness including incessant hand-washing, covering coughs and abstaining from contacting your face.

In addition to physical wellbeing, contractual workers are thinking about emotional wellness, as well, since there is a lot of anxiety and panic among the employees related to coronavirus. 70% of employees in the construction industry state “employee anxiety” as their top worry, above material deficiencies and government shutdowns. 

Material Deferrals

Nearly 30% of imported construction materials in the US comes from China. As China’s manufacturing output has declined, supply chain constraints could result in project delays for months to come.

However, some American construction firms take almost 80% of their construction materials from China as it is available at a lesser rate. Though we already know where this outbreak has started from, so getting the raw materials from there now would be challenging. USA will have to bear the material cost increments along with the delay in the procurement of the material from China or elsewhere in this global outbreak.

The Quarantines and Lockdowns

Everything boils down to time and money in construction industry. To help prevent the spread of the infection, numerous schools, universities and organizations have closed down. Construction firms are still in the dilemma and fear of how they will cover up with the delays of the project completing after their site has been shut due to quarantine. These shutdowns and bans imply that organizations should work from home and involve teleworking with different technologies to keep the business going.

Now the question arises that how will we develop structures and roadways without physical nearness? So it will be intriguing to perceive what potential arrangements individuals think of for that.

Global Uncertainty

There has been immense amount of instability in the stock market along with Oil disputes in the Middle East intensifying the degree of restlessness among Americans. They are fearful about their retirements and annuity benefits in this scenario.

Indeed, the infection and its effect have terrified the business sectors so much that a few researchers state, they can’t presently make a gauge for the rest of 2020.

“It has completely muddied the standpoint for 2020,” said chief of the Economic Forecasting Center at Georgia State University. “Keep in mind, the occasion is as yet going on, so you can’t do the economic effect if the occasion isn’t finished.”

Researchers are prediction that the U.S economy will soon enter recession wherein the nonresidential construction ordinarily slacks the general economy by one to year and a half time. This implies numerous temporary workers can expect “increasingly troublesome conditions” one year from now. Right now is an ideal opportunity for the construction industry to plan for the infection’s effect despite much still remains to be seen.

Legality issues in construction sector

Nobody has foreseen this coronavirus pandemic. The contractors would still be responsible for the delays and running over budget on the ongoing construction projects.

So during this distress of pandemic, the contracts should be reviewed to get the clarity on the contractual rights and duties that exists in light of the conditions caused by the virus’ spread.

Each contract has its own repercussions. Advocates suggest each contract to be thoroughly reviewed to know whether if there is any special force majeure provisions that allow work to be suspended or terminated when certain extenuating circumstances arise. To know whether such provisions are applicable or not, will depend on the jurisdiction and contract. However it is said that force majeure will almost apply in Corona Virus outbreak situations.

Outlining the facts

The Impact of coronavirus spreads across the world on all businesses and industries, including building industry.

Largely the American construction companies depends heavily on foreign suppliers and producers for building raw materials. China was one of the major supplier of the above mentioned articles and since most of the companies have closed due to quarantine, the production lines have stopped creating shortages.

Since China and other material supplying countries will take time to recover, the contractors will have to find alternatives which would lead to more expensive sources of raw materials perhaps increasing project costs. However the building project managers can focus more on the preconstruction stage of construction during this phase of quarantine. As the situation unfolds in relation to coronavirus, we at Tesla Outsourcing Services are offering CAD & BIM Services from India. We are prepared to serve our best to keep your projects on track once the pandemic ends.

Written By:
Dhvani Badheka
Dhvani is an irreverent writer who has over 4 years of experience under her belt. She is a life-long learner and a quick study which provides her articles a unique insight. She is always reading, researching new materials and trying to expand her knowledge of the AEC industry so that she can create interesting and valuable content.

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