While the construction industry has weathered the coronavirus (COVID-19) pandemic better than others like retail and hospitality, it hasn’t been all kittens and rainbows either. From February through April, the construction industry lost over a million jobs. To put that in perspective, during the Great Recession the industry lost about 2.3 million jobs. Through June, the industry has managed to gain back over 600,000 jobs.
Table 1 sets out latest (June 2020) construction-related cost items from the Producer Price Index (PPI) data set published by the Bureau of Labor Statistics (BLS).
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The construction industry opened the year 2020 cautious but optimistic about the future, and then COVID-19 swept the nation and the rest of the world. The crisis has prompted governments to implement strict lockdown protocols to contain the spread of the novel coronavirus. Four months after the first recorded case in the country, several places are starting to relax these safety measures in order for the economy to move forward. At this moment, construction business owners need to think about a business reopening strategy and how they can adapt to a post-COVID-19 construction environment.
U.S. put-in-place construction spending, during the coronavirus health crisis, has benefitted from the carryover of work begun last year. 2019 construction starts included an inordinately large number of mega projects valued at $1 billion or more each. There were 35 such projects last year, with a summed value near $80 billion, or 15% of nonresidential groundbreakings.
As with most things pandemic-related, it’s hard to know where the cost of construction will land six months, or a year, or two years from now. Set out below are 10 ways in which costing in the sector is likely to be impacted in the period ahead.
The spread of COVID-19 was all about uncertainty and distress. With people being strongly advised to follow social distancing protocols, the government had its focus on controlling the spread of illness by restricting travel and work. And just like any other industry, the construction world is also going through a tremendous struggle in sustaining the project pipeline and workflow.
The COVID-19 pandemic has rocked many industries to their very core. Lockdowns, quarantine, social distancing, and other health-protecting procedures keep the virus from spreading, but they also create numerous challenges for businesses trying to navigate this new normal. What contract issues are construction industries facing, and how can they make their way over this hurdle?
With confirmed U.S. cases of COVID-19 standing at 1.87 million, with over 108,000 of those cases resulting in death, to have even a fleeting thought of returning to the pre-COVID-19 workloads is not just lofty, it’s wishful thinking. Construction firms are often an early forecast of the financial times because residential construction is normally considered a “luxury” item by the homeowner, and the ability to freeze capital funds in times of uncertain business futures almost guarantees that new construction is the first fat that is trimmed from most budgets.
Ever since it struck at the beginning of 2020, COVID-19 has altered our lives. It has wrecked the economy, shoved millions of people out of a job, and locked us inside our homes.
Businesses across the country and around the globe must close their doors to prevent the spread of the coronavirus. Anything not considered essential is closed, and that includes many construction sites and projects.