Pandemic’s Effect On Engineering & Construction (E & C) Industry

By Tapaswini Mohapatra Samant Architect, Environmentalist

The COVID-19 pandemic and its attendant effect on markets is offering challenges to the engineering and construction industry .Challenges are uncertain and erratic. Uncertainty surrounding the period is difficult to predict how a recovery could unfold for the industry.

Some construction projects have been delayed, and some cancelled. Further, possible supply chain bottlenecks of equipment and materials, could cause project delays in currently funded projects, or reduced spending on future ones. Initial lock down had shut down forgo of the construction, creating possible effects on the construction industry. Just days back, many parts in India got a green signal to resume construction, while construction continues to be passive and slow in progress.

The most immediate impacts are being felt at the subcontractor middle market of the industry. Subcontractors may be especially vulnerable to bankruptcy. EC companies have had projects cancelled or delayed in droves, and it is difficult to estimate when projects will get back on correct track, and how growth will be impacted the next few years.

Many employees have been laid off. Some engineering and architecture companies are having their employees working on an hourly basis from home when there is project work. Construction companies and their projects are on hold until lockdowns ease, while project durations and costs are on the rise due to slower progress and huge disruptions in supply chains. Challenges are coming from all angles and the industry is scrambling to figure out how to ease the impact and do damage control.

Some of the possible causes of the Slowdown of EC Industry are stated below:

Steps to Deal with the Situation:

The major Steps to overcome the effects of COVID-19 on EC industry will be proper scenario planning.

STEP 1.– By making assumptions on what the future may hold and how your business environment may be impacted, you can develop dynamic strategies. For the given situation, some suggestions are following:

• Review outstanding accounts receivable. How can you accelerate collections? Project collections for at least the next three months.
• Review outstanding accounts payable. Determine when payments need to be made. Project payments for the same period.
• Project employee costs for the same period.
• Project cash flow for each current project – money in and money out.
• Project overhead for the same period.
• Put it all together.

What does it look like? If you can anticipate it, you can make changes. Are you

in good shape? What big challenges lie ahead?

STEP 2. – Prepare at least 2 or 3 scenarios based on a sharp drop off in work. For instance, consider a 25%, 50% and 75% drop in work.

STEP 3. – It is also important to keep valuable Project Managers and Supervisors on your team. So maintain the team and anticipate for a better tomorrow.

Corporate Comm India (CCI Newswire)