How to Move Forward, Not Backward, as a Construction Contractor During COVID-19
There’s no doubt that COVID-19 is posing a major challenge around the world, not only to human health, but to business as well. How is the construction industry faring? We can expect to see some difficulties, of course, but construction is one of those trades that is truly necessary to keep the world moving forward. So long as you know what to watch for in the coming months, you’ll be able to move forward and stay in business through the worst of this crisis.
What can Contractors Expect?
Project delays and even cancellations are a very likely possibility for construction contractors—something that some have likely already experienced as the COVID-19 crisis has worsened. In fact, on March 17, Boston’s Mayor announced a two-week ban on all construction throughout the city. Recently, however, Massachusetts Governor Charlie Baker made an exception for new housing projects—and that’s because of the serious shortage in housing units across the state. Some unions, however, are protesting this, insisting that their workers stay home for all but emergency and critical infrastructure projects.
Another issue may be among the construction industry’s supply chain. With manufacturers temporarily closed, and with imports of things like steel and glass from Asia slowed, delays in material delivery are to be expected.
Subcontractors may be hit hardest in all of this. As smaller businesses with less capital in reserve struggle to pay wages and keep up with operating costs, some could end up declaring bankruptcy as the crisis wears on.
All of this uncertainty also leads to uncertainty among markets, with both clients and lenders nervous about taking on new projects in light of the uncertain future. This can make it harder to secure new projects and to get the financing needed to complete those projects.
Bright Side: Stimulus is on the Way
On March 27, President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act, which looks like it will provide emergency relief across a variety of industries. The CARES Act features a total $339.9 billion in funds, and current estimates from Engineering News Record say that at least $40 billion of this could go into the construction industry.
With this, CARES allows some funding recipients to decide how those funds will be used. For example, part of this stimulus package features $10 billion as part of an Airport Improvement Program that provides grants to airports. According to this new law, that $10 billion can be used for any purpose that an airport might normally use revenues—including things like infrastructure construction.
Other potential construction opportunities provided through CARES include $5 billion to the Housing and Urban Development Department as block grants, plus $1.5 billion to the Defense Department as part of a package to expand hospitals and construct modular field hospitals.
For subcontractors and small businesses struggling to pay employees, CARES features the Paycheck Protection Program. Through this, companies with 500 or fewer employees can receive loans of up to $10 million. Employers who use these loans to cover payroll and health insurance will not have to repay those loans.
CARES is unlikely to be the only stimulus package on the way, either. Politicians are already looking ahead at not just mitigating the current state of affairs, but also developing new stimulus packages to help the economy recover as the pandemic begins to wane.
Preparing Your Construction Business to Move Forward
Aside from the CARES Act, there are lots of steps you can take to mitigate potential losses and keep your construction business moving forward.
- On the financial side of things, review your budgets thoroughly. Can loans be refinanced? Are there material stores that ought to be liquidated to prevent value loss or taxation on these things? Trim costs where possible to keep operations running smoothly.
- Your workforce needs protection, too. Make sure employees know how to protect themselves on the jobsite, and if needed, provide additional personal protective equipment to help them stay healthy.
- Because supply chain issues may become problematic, it’s a wise idea to develop a list of alternate suppliers. This way, if your usual suppliers are unable to provide building materials, you’ll know where to turn to keep a project going.
Times will be tight moving forward, but despite the COVID-19 crisis, it is possible for construction contractors to keep moving forward. The primary concerns will be taking extra measures to keep employees safe and healthy on the jobsite while looking at ways to trim overhead. With these things in mind, construction contractors can keep forging ahead instead of moving backward.