Lockdown 2.0: Will the construction industry survive or thrive?
Published on 10th Nov 2020
As England enters lockdown 2.0, is the construction industry better prepared this time to continue to "build, build, build"?
Now that England has entered its second national lockdown arising from the Covid-19 pandemic from Thursday 5 November 2020 to 2 December 2020 (at present), what impact will this have on the construction industry and on the progress of projects in the pipeline and mid-build?
Unlike with the lockdown imposed in March 2020, the guidance this time round is clear: construction sites and manufacturing workplaces can remain open. Much uncertainty was felt across the industry back in March without clear guidance from the government and a lot of construction sites were closed for a period of time, delaying and hampering existing projects. According to the Office for National Statistics, construction output fell by 10.6% in the three months to July 2020, compared with the previous three-month period.
The clear message from the outset this time round for the industry should assist in ensuring the continuity of existing projects. Construction sites should also already be operating with social distancing restrictions and measures necessary to prevent the spread of Covid-19. As such, projects should face less disruption in implementing measures to ensure the safety of their workforce and compliance with necessary legislation and regulations. However, it will be interesting to see whether the rebound in output that has taken place since July 2020 continues, notwithstanding the wider societal restrictions.
Construction companies have also embraced technology to assist them with managing the pandemic. In a survey undertaken by Procore (a construction management software firm) of 250 UK construction middle managers and above, 66% had rolled out some form of new technology during the initial stage of lockdown. Research undertaken by Loughborough University and commissioned by leading main contractors also gives the example of the use of data capture techniques being enhanced to allow site teams to monitor worker numbers and how effective social distancing was to identify pinch points and support revised site layouts and work planning. It is evident that Covid-19 has accelerated the industry's adoption of technology.
Increased investment has also led to new pipelines of opportunity. The government has announced: up to £37bn of funding for over 250 projects from the National Infrastructure and Construction Pipeline. This includes significant investment in projects in local communities such as the Free Schools Programme and local transportation projects; and the Green Homes Grant to improve the energy efficiency of private homes as part of the net-zero agenda.
Despite the lessons learnt from the first lockdown, those operating in the construction industry are still likely to face issues in progressing and completing projects:
- The health and safety risks associated with on-site teams continuing to work will remain and employers and contractors have a difficult balance to strike in ensuring the wellbeing of their workforce while seeking to progress and complete the project with minimum disruption.
- Sites will still be operating with social distancing restrictions. This is still likely to impact the ability of multiple trades to be on site or working in the same area simultaneously and cause difficulties with the location and movement of resources.
- The financial stability of the supply chain may be severely tested and the risk of insolvency will be heightened as the wider economy suffers. Careful and increased monitoring of the supply chain and cash flow is likely to be necessary. We may also see an extension to the current restrictions on enforcing statutory demands.
- There are early indications that the supply chain is struggling to keep up with demand for materials. The Construction Index has reported that October saw another lengthening of delivery times for construction products and materials; the most pronounced since June. In addition, despite construction and manufacturing continuing in England, many projects may be dependent upon equipment or materials from abroad, where the restrictions in place are different and may affect the transportation and movement of goods required to enable the project to continue on programme.
While the construction industry may be better prepared for lockdown 2.0, there are inevitable risks to parties and projects as the Covid-19 pandemic continues. Only time will tell whether the lessons learnt from March 2020 will enable the industry not only to survive but to thrive.
Covid-19 Project Toolkit
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Covid-19 Project Toolkit
This update is part of Osborne Clarke’s comprehensive Covid-19 Project Toolkit. The Toolkit is designed to help you navigate the complex issues around Covid-19 claims, covering the FIDIC, JCT and NEC standard forms, along with guidance on the disputes process, commentary on government guidance and site operating procedures, and our expert view on future-proofing the next generation of projects.
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