What impact will COVID-19 have on the construction industry?
As architects, we are already seeing the devastating effects on the market, larger construction sites are closing, stocks in the major housebuilders are down. Persimmon PLC has seen a drop from 3500p to 1500p per share, Taylor Wimpey PLC from 235p a share down to 105p and the retirement home specialists, McCarthy & Stone PLC are down from 158p just last month to 39p per share, this will no doubt lead to construction worries.
Projects have been put on hold for us, which is worrying and understandable, however, we feel this will be a temporary measure, and we should be grateful that the majority of us are healthy and we should be doing what we can to protect those who are most vulnerable as life always comes before business.
Control of infection is a higher risk with larger, high intensity occupied construction sites, which is obvious, as they employ more people and larger areas are more difficult to regularly clean and sanitise, but what about the smaller sites?
Architects and Contractors must comply with the Health and Safety at Work Act, which includes taking the necessary steps to avoid the spread of Coronavirus. Generally, contractor’s work areas are separated from occupier spaces for safety reason and if clients employ a contract administrator there should be no reason why the contractor should liaise face to face with a client/employer.
If you have a building contract planned in the coming weeks or months there are measures that can be put in place to protect you and your family.
On the brighter side, the UK government have introduced market stimulation measures and the Bank of England have introduced historically low rates of borrowing, with the BOE base rate now at 0.1%, which will be reflected in construction loans and remortgaging rates. The dangers that come with cheap money and stimulation package from the government is a likely hike in inflation as the economy redresses itself. As the amount of funding offered by governments worldwide is unprecedented, there is no indication at where the inflation levels may be in 12 months’ time, however, we are expecting a rise in construction costs.
Back to the worries. If you are ready to start a construction project here are some questions to ask:
• Am I in a high-risk category? If you feel you are, don’t put yourself in unnecessary danger. If you have a weakened immune system, respiratory illness, cancer, diabetes, think about delaying your contract. If you have a contract in place and you are 14 days past the date of signing, the contractor may be entitled to reasonable costs to abort the works, otherwise, as a consumer, you should have 14 days to cancel any building contract.
• What measures can be put in place to reduce the risk of catching COVID-19? If your contract is being administered by an architect or contract administrator, they will ensure that the contractors are complying with their health and safety obligations. Additional measures may include:
1. Washing hands regularly.
2. Ensure contractors and subcontractors report any ill health to them or their immediate family.
3. Ensure there is no direct contact between clients and contractors.
4. Ensure that there are no shared facilities available i.e. toilets and washrooms and kitchens.
5. Keep works area and occupiers areas entirely separate.
6. Thoroughly clean sites after each day
If you are currently under contract and in a high-risk group, Force Majeure may apply. Please speak to your contract administrator. Your administrator can negotiate a suspension of works and carefully monitor the current situation and advise further.
For contractors, speak to your suppliers and subcontractors to ensure you have sufficient lines of credit should works become suspended.
The effects of COVID-19 will be devastating to the industry and wide-reaching. As there is no clear guidance and each construction project should be risk assessed based on its individual nature and remember do not put yourself in any unnecessary danger.
There is currently little information available from the UK Government and construction associations such as CIOB and APS and we are monitoring the situation carefully. Most construction programmes will run as normal with additional health and safety measures. MLM Building Control have just announced that building inspections and consultations will adopt a ‘digital first’ approach which is extremely encouraging and hope that LABC and other approved inspectors will adopt this approach. Key inspection will still require physical inspection.
If you have any concerns regarding a project or require any contract administration services, please do not hesitate to get in touch with the team at Cannon Clarke Architects on 01603 567415 or email enquiries@cannonclarkearchitects.co.uk
Date: 19 March 2020
