COVID-19 [October] update: its impact on construction projects

COVID-19 [October] update: its impact on construction projects

The COVID-19 pandemic seems to be far from finished and continues to impact construction projects in the UK. Read on for the latest industry insights.

COVID-19 strikes back in the UK

The UK has witnessed a second wave of coronavirus during September. Whilst at the end of August daily cases were below 2,000, by the end of September this number has surpassed 7,000. The R number has risen to between 1.3 and 1.6 in the UK. That means that each person who has COVID-19 will infect another 1.3-1.6 people with it. The R number for coronavirus is estimated to be 3 when no measures are put in place. Governments strive to keep the R number below 1, which helps to keep a downward trend in daily cases.

PM Boris Johnson recently suggested that the new spike may be due to people getting complacent. What we are seeing is probably the consequence of the relaxation of those measures during the summer.

New restrictions to stop the spread of the virus

The exponential curve of daily cases since the end of August has forced the government to implement new measures in an effort to contain the spread once again. The new rules introduced in England since 24th September include:

  • Pubs and restaurants closing no later than 10 p.m. and providing only table service
  • People should still work from home wherever possible
  • Limit on guests on weddings reduced from 30 to 15
  • Face masks compulsory for bar staff and non-seated customers, as well as shop workers and waiters
  • Indoor team sports limited to 6 people
  • Fines for not wearing masks or following the rules increased to £200

Planning applications continue to be impacted by COVID-19

And as COVID-19 cases rise again throughout the country, it continues to impact construction projects. The Ministry of Housing, Communities & Local Government (MHCLG) has recently revealed figures showing that planning applications made in England between April and June this year fell by 23% compared to the same quarter last year. There was a total of 88,000 applications and 71,700 decisions made. That means that the number of applications that received a decision also fell by 22%.

Within the arena of major contractors in the UK, Amey recently reported £217M losses as COVID-19 delays the sale of its utilities and waste business. Amey itself is also up for sale since 2018, as its parent company Ferrovial decided to divest its portfolio. Luckily for the UK contractor, its remaining core business raised turnover from £1.5bn in 2018 to £1.9bn in 2019. Also, they had a profit of £73M, compared to a £178M loss in 2018.

Public transport also impacted by COVID-19

On the rail side of things, a report by transport consultancy Steer for the Urban Transport Group found that public transport demand will probably be below pre-COVID-19 levels for a few months at least. It also highlights that if the government prematurely withdraws its financial support to trams and light rail systems, they could face temporary closures.

COVID-19 also continues to impact large construction projects, such as the Western Rail Link to Heathrow. Procurement for this £900M project was due this summer. However, Network Rail has announced that it will be delayed at least until summer 2022. This project aims to connect trains coming from the Bristol and Reading area directly with Heathrow, rather than having to go through London first. Critical for the economy as it may seem, COVID-19 has severely impacted this project as demand for air travel continues to be low.

The good news – more support, jobs and compliance

Thankfully, it is not all negative for the industry. In fact, there is some good news too. The government has announced a new Job Support Scheme. This scheme will be aimed at small and medium-sized employers within the construction sector. To be implemented from 1st November for six months, it will contribute to pay part of the wages of employees who are working fewer hours than normal. The industry recognises that this is a critical scheme to ensure that small and medium-sized organisations can retain their staff.

According to M&DH Insurance Services, the demand for construction jobs increased during the second quarter of the year, in spite of the lockdown. Their data shows that from 1 April to 30 June, the number of construction workers increased by almost 1% in the UK. Some regions, like the West Midlands and the South East, saw a 6% increase. The most negatively impacted region was the North East, with a 7.5% decrease in construction jobs.

Additionally, a recent study published by Building Safety Group (BSG) found that the number of COVID-19 breaches occurring in construction sites has decreased by 41% in the last 3 months. Their study was based on 4,400 independent construction sites inspections, which took place between 1st June and 31st August. BSG believes that this reduction is a good indicator of how construction companies are adapting to the coronavirus measures and restrictions on site.

Although COVID-19 continues to impact construction projects, it is imperative that we, as an industry, carry on learning, adapting, and improving. It is a collective effort to ‘build back better,’ using the opportunities of digital transformation to come out of the pandemic better than before.

How’s COVID-19 impacting your work? Let us know in the comments below!

 

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