INDUSTRY VIEW
Construction
Construction Management • Interior Design • Facility improvement
THE NEW NORMAL
What Has Changed?
1
Cleaner Job Sites
Concerns over employees becoming infected will lead to cleaner sites. In particular, indoor air quality will become more important as companies focus on building a healthier environment.
2
Distancing via Technology
Remote working will continue and telework will become more common.
3
Climbing Costs
Disruption and delays in the supply chain are causing increases in material costs.
4
Evolving Supply Chain
Companies that rely on supplies from China will likely diversify their supply chain to other sources, including back to the US.
5
Sprouting Partnerships
Construction businesses demonstrated the highest number of partnerships created as a result of COVID-19 out of any industry, particularly within the same industry and competitors. Strategies include sharing projects with complimentary contractors.
6
Longer Project Duration
Project duration will be longer because of safety measures and fewer workers on the site.
7
Nature of Business
The nature of construction firms poses several difficulties in safety/health compliance, as many employees are required to work on-site (e.g. inspectors, traffic control). Seasonality and weather dependence (e.g. painting) present issues to qualify for federal loan forgiveness guidelines.
8
Looming Revenue Drop
Revenue for construction businesses overall has not been immediately impacted, particularly for Business-to-Government (B2G) firms. Previously acquired contracts already have several months of delayed revenue. However, some are beginning to experience cancelation and delays in contract procurement, especially as state and local governments run out of funding.
RECOMMENDATIONS
How Should I Recover?
PHASE 1
Onset
Establish new partnerships
- Explore the local and national Ascend network for opportunities. Look into industry groups and associations like the National Association of Women in Construction and Associated Builders and Contractors.
- Partnerships can enable the sharing of capabilities, expertise and employee talent to increase competitiveness in bids and overall performance.
- Benefits include packaging complimentary services (such as roofing and trimming foliage) and generating new and enhanced product offerings.
- Lowered risk, inventory pooling, and co-ordering can reduce the risk of shortage and provide savings.
Become certified for special services
Adjust supply chains to local sources
- Consider local alternatives for suppliers, manufacturers, and distributors to mitigate risk of continued challenges with international supply chains. Some free online domestic supplier directories include ThomasNet, Maker’s Row, MFG, and Kompass. Each includes profiles and verification of thousands of manufacturers, suppliers, and wholesalers.
Acquire services and assets at fire sale prices
- As some companies are permanently dissolving, many are willing to sell their physical assets. If an asset has strategic value, now is an opportune time to acquire them.
- Many small business owners and contractors are in survival mode and will benefit from any type of work. They are willing to offer services at lower costs and bargain.
PHASE 2
Oscillation
Ensure proper adherence to new COVID-19 safety measures
- The Center for Disease Control and Prevention released a set of guidelines for construction firms.
- Occupational Safety and Health Administration provides a list of guidelines for construction workers.
- Arrange schedules and operations with other companies working on site accordingly.
Re-evaluate existing employee talent
- Review employee skill sets and transfer some to management areas in the business. This can satisfy federal funding forgiveness requirements and can also offer creative new ideas for business growth and revenue opportunities.
Brainstorm strategies to differentiate products and services
- Explore new disinfection technology to ensure safety standards of construction sites, such as electrostatic disinfection paint and ultraviolet light.
- Look into strategies to reduce and eliminate sources of air pollution. Improve ventilation and filtration systems that directly remove air pollutants.
Acquire projects with potential for new and sustained growth
- Consider contracting opportunities with health care facilities. Following the pandemic, there is increased interest in constructing and enhancing the capacity of hospitals, clinics, and other medical buildings.
- There are research opportunities in the aviation industry. The Airport Improvement Program will invest $3.2 billion in the development and modernization of aviation facilities across the country, and the governors of some states, including Florida and Minnesota, have accelerated billions of dollars of transportation projects in an effort to lessen the economic fallout from the coronavirus pandemic and to take advantage of fewer vehicles on the road.
Create and experiment with new revenue opportunities
- Quality of life home improvements, such as new sinks, kitchens, outdoor work and the like are on the rise, as people spend more time at home. Help haul waste and excess material from home improvement projects to transfer stations, as people are cleaning out garages, fixing homes, gardening and landscaping. Buy and transport construction equipment and materials. As homeowners desire to complete home projects, the need for delivery trucks and materials may increase.
- Restaurants are looking to improve their outdoor spaces to reduce risk of infection.
- Businesses in other industries, such as retail, are developing strategies to reformat and redesign their space and building structures.
- Provide COVID-19 readiness projects for other small businesses. These include Plexiglas and plastic shield installation, air ventilation projects, office improvement, and more.
- Demand for distribution and warehouse space may likely increase as U.S. companies favor higher inventory levels and emphasize supply chain resiliency over efficiency. Consider expanding or pivoting the business into the warehouse sector.
PHASE 3
Opening
Adapt cutting edge technology
- Following COVID-19, it will be increasingly important for construction firms to differentiate their services with new technology. Consider ways to adopt technologies like drones and artificial intelligence for inspection, cameras for remote surveillance and special materials for disinfection.
Case Studies
Success Stories
Marion Built
Michael Marian started using his trucks to offer junk hauling services for his neighborhood, as a way to make ends meet.
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Pacific CM
By rethinking the nature of work in the COVID - 19 work environment, Pacific CM was able to drastically cut overhead while maintaining true to the company’s overall mission.
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Alpha Omega Electric
Nathan Turner at Alpha Omega Electric communicated directly with his customers to find new opportunities and services, adding new streams of revenue.
SEE FULL STORYTechnology
Tools to Adapt
Drones and AI for Inspection
Utilize drones to conduct on-site inspection. Analyze photos and videos with artificial intelligence to spot safety hazards and identify possible construction issues.
Remote Surveillance Devices
CamD provides remote surveillance devices. Smartvid is a social distancing project designed for construction only and is utilized by many businesses.
Virtual Public Meetings
AECOM is a interactive web-based tool that allows clients to hold virtual public meetings.
Useful Industry Resources
Find More Ways to Help You
Federal General Services Administration
Companies can search for public construction contracts and bids at the Federal General Services Administration.
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McKinsey
McKinsey released an article detailing short-term and long-term trends for construction following the coronavirus.
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American Institute for Architects
The American Institute for Architects compiled an in-depth set of COVID-19 resources for architects, including special offers and discounts for software.
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