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

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

COVID-19 continues to impact the UK economy in general, and construction projects in particular. Read on for the latest construction and engineering industry insights, facts and figures.

The current COVID-19 situation in the UK

Although coronavirus-related deaths continue to fall in the UK, infection rates are slowly increasing again, with over 1,000 daily cases during the last week of August. This doesn’t necessarily mean that there are more infections. It may well be a consequence of the increase in tests being done. Whichever the case, one thing is clear – coronavirus is still out there and continues to impact society in many facets. Many individuals seem to think that we are now back to ‘business as usual.’ As we shall find out, we are still far from that point.

We are also approaching a double challenge. On the one hand, we need to monitor closely how cases evolve after schools and universities re-open. On the other, we have the added threat that comes with the beginning of Autumn. As we all know, Autumn is the perfect time of year for respiratory viruses to spread. Also, the government has just announced that the local restrictions in Northern England will be eased from Wednesday 2nd September, apart from Leicester, which will continue in lockdown until a review on the 11th September.

COVID-19 continues to impact construction projects with redundancies

The global pandemic continues to impact the UK construction sector. As many engineers, architects and contractors return to the office, so increases the number of concerns raised about ventilation systems. Most current heating, ventilation and air-conditioning (HVAC) systems recirculate the air, rather than pumping in fresh air constantly. This is to maximise energy efficiency in the building. But since the World Health Organisation acknowledged in July that airborne transmission of COVID-19 ‘cannot be ruled out,’ office workers are understandably concerned.

Official data from HMRC shows that construction firms have claimed more than £2.9bn through the job retention scheme. This represents almost 10% of the total £30.9bn that the government paid to furlough employees. COVID-19 also continues to impact construction by cutting jobs. This is evident in the case of the Construction Industry Training Board (CITB) with the announcement of 110 redundancies by the end of August. This proposal would help the organisation save £4.5m per year. Sarah Beale, CITB chief executive, said last month:

‘CITB started the year with an agreed business plan and budget, but the impact of Covid-19 has been severe. We have to cut back our back-office and management costs to maintain a constant focus on giving construction employers the direct support that they need. It is deeply distressing to have to propose losing so many valued and committed colleagues.’

Major construction projects impacted by COVID-19

The impact of the pandemic on construction projects also remains significant. The supersewer Thames Tideway project in London has just announced nine months of delay and a further £233M to the budget. COVID-19 restrictions have pushed the total cost to £4.133bn. An investor report also highlighted a second worst-case scenario that could see the costs of the remaining work rising to a total cost of £4.3bn.

In the aviation sector, Gatwick Airport has put its Pier 6 Expansion project on hold. They have decided to stop this £180M project after passenger numbers fell by 66% in the first half of the year due to the pandemic. The collapse in passenger demand has led to a 61.3% fall in revenue and a £321M loss for the airport. As a result, they have had to postpone this project until at least 2022, when passenger numbers are predicted to grow again.

Looking at the travel network, Crossrail has recently announced a new delay to its opening date. Not only has it been pushed back to the first half of 2022, but it will also need another £1.1bn due to the pandemic and the resulting downturn in productivity. The overall Crossrail scheme is now likely to cost above £19bn.

Investment in infrastructure is key for recovery

Looking at the wider scheme of things, the Office for Budget Responsibility has forecast GDP to reduce by 12.8% in 2020, whilst unemployment could rise to 10%. The recovery needs careful planning, and construction and infrastructure can play a critical role. Investment in infrastructure could become a well-needed stimulus for growth in other economic sectors. Infrastructure investment can also help to create jobs. In fact, studies show that for every 1,000 construction jobs created, an additional 2,053 jobs are added to the wider economy.

Engineering company Atkins recently published a report titled ‘Infrastructure Insights: COVID Impact and Recovery.‘ They surveyed infrastructure leaders across all sectors, to find that only 12% are confident with the government’s recovery plan. The good news is, 97% of the 398 participants said that their organisations were well prepared for recovery. The report also found that 68% of infrastructure businesses expect their companies to have recovered by 2021.

The good news

And to end this article on a positive note, a new study led by Balfour Beatty and carried out by Loughborough University found that individual and team effectiveness and productivity has increased as a result of COVID-19. The study found that despite overall construction site productivity being negatively impacted, individual and team productivity had improved. There are several reasons behind their positive findings.

Loughborough University assessed six major construction schemes in the UK. They found that some of the reasons triggering the improvements were better planning and reduced waiting times between tasks. A boost in technological innovations and fewer meetings were also two main contributors to the increase in productivity. This demonstrates that in every negative event, there is always a positive side. It is up to us to learn from it.

Has COVID-19 impacted your construction projects? Tell us how in the comments below!

 

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