Strategy Sessions: How Contractors Can Survive and Thrive in a Post-Pandemic World
The construction industry weathered a one-two punch amid the pandemic and uncertain economy, gaining and losing hundreds of thousands of jobs since the spring. As of August, the numbers from the Association of General Contractors tell a story of 7.6 percent industry unemployment, with 870,000 workers waiting to get busy—which is actually better than the preceding months. In a press release, the Association said that recovery will come through infrastructure and other pro-growth initiatives—which will have a ripple effect to boost other industries, such as trucking and manufacturing.
Deb Kunce, FAIA, LEED AP, managing principal of Indianapolis-based CORE Planning Strategies, helps to facilitate and plan construction projects. She says the advent of COVID-19 brought existing industry challenges into sharper focus. “Contractors were already experiencing challenges with workforce shortages and materials being delivered, and logistical issues have made it even more difficult."
The pandemic also called for immediate adjustments to how jobs are done, especially when it comes to safety. “In the short term, contractors have pivoted to make safety modifications, both in their clients' facilities and on the job site. Contractors are helping their clients modify environments and add features like touchless fixtures, plexiglass separators and mechanical system upgrades. On job sites, we've seen more masks and gloves, more hand-washing stations, limitations on construction trailer occupancies and social distancing," Kunce says.
But looking even further out, Kunce sees that the longer-term economic slowdown for industries such as retail, hospitality, restaurants and entertainment—plus institutional stagnation–will cause project pricing to decrease, while materials may increase due to scarcity. “From a business development and marketing perspective, contractors are also starting to pivot their market focus, given some of the slowdowns in certain sectors," she explains.
Planning for Future Success
There's also a silver lining in this gunmetal gray-cloud, Kunce says, about using this time to move the industry forward: “In terms of permanent changes, we anticipate seeing higher expectations for air quality standards and mechanical systems and a switch to automated, touchless features throughout facilities."
Indeed, business-consulting firm Accenture also points out that this is an opportunity for radical transformation. A report on the COVID-19 impacts on the industry reads: “Companies who fast-track their digital adoption by augmenting workers and engineers with digital collaboration capabilities, automating low value-added activities and sharing data for rational and insight-driven decision making, and who reinvent their relationship with third parties—clients, suppliers, subcontractors—will be strengthened and ready to succeed in a post-COVID-19 world."
The steps to focus on, the report says, include:
- Manage cash and audit how you operate. What can you automate and where can you streamline?
- Become safer than ever before. Support anyone who can work remotely with “liquid architecture" and virtual solutions so that they can still collaborate and get their jobs done. For those who are on-site, it's time to not only shore up existing safety protocols but to add measures to minimize COVID-19 risk.
- Reconsider and mitigate risks to your supply chain. “Enhanced focus on worker safety and increased cost pressure could accelerate the move to offsite construction methods." Some pieces may be better sourced with factory production, for example.
- Plan for ongoing disruption. It's always better to expect the worst and be delighted if it doesn't happen. Project strategy must now, more than ever before, include higher costs, scarcity, economic factors and time delays. Transparency with stakeholders is key.
- Reinvention. Times of crisis call for innovation, and now is the time to move forward. “[Businesses] can only do [this] by reinventing their relationships with the ecosystem, developing new business models to mitigate risk, and shifting to collaborative engagements rewarding risk and long-term partnerships."
Kunce estimates there will be stagnation through 2022, but offers this advice for contractors: “Fewer new projects are starting, so contractors should focus on being responsive, adapting to meet their clients' demands and providing great service with competitive costs. This increases the chances that the client will hire them again in the future. In addition, some markets are being hit harder than others, so contractors should determine if they need to diversify and expand their focus into other project types."
Solid advice for pandemic times and beyond.