We asked nearly 900 construction business owners how COVID-19 has impacted their businesses. Their responses have given us a great insight into the challenges the construction industry has faced over the past few months, and what the post-COVID construction industry might look like.
This year we’ve seen businesses in every industry face the unexpected challenges of a global pandemic. While some industries have thrived during these difficult times, others have suffered trade restrictions, drastic drops in demand, and reduced availability of goods, services and workers.
The construction industry is one sector that has been hit particularly hard by COVID-19, with government guidelines putting a stop to construction work earlier in 2020. Construction workers were able to return to work in May, but the industry hasn’t quite recovered yet.
We wanted to see how COVID-19 has impacted construction businesses, and how businesses are coping in the current climate, so we conducted a survey about the construction sector’s COVID-19 experience. We asked 857 business owners in the industry 10 questions about how the pandemic has affected their businesses, how they’re coping now, and how they’re feeling about the post-COVID business landscape. We’ve created the following infographic and article summarising their responses.
Construction COVID-19 Infographic
How COVID-19 Has Affected Construction Businesses
Unfortunately, construction isn’t one of the industries that have thrived during the pandemic. The general findings of our survey show that the majority of construction businesses have been hit hard by COVID-19.
Many of the business owners we surveyed have been impacted by trade and travel/transport restrictions, increased operating costs and a significant decrease in demand. These factors, coupled with the fact that so many businesses have had to cease operations at some point — cancelling or postponing projects — mean that businesses are experiencing a drop in profitability.
However, the news isn’t all bad. Our survey results also show that businesses are getting back on track and that they’re confident about the future.
We’ve summarised our survey findings to give a better insight into how construction businesses are coping during these unprecedented times.
Over 70% of Businesses Experienced a Decrease in Turnover
We asked our survey respondents if COVID-19 had affected their turnover. 72.47% of respondents — that’s around 620 construction business owners — answered that they have experienced a decrease in staff turnover. Nearly 20% of these respondents experienced a decrease of more than 50%.
Only 21.12% of respondents said that the pandemic hadn’t affected their turnover at all, and 6.42% said they’d actually experienced an increase in turnover.
Almost 70% of Respondents Had to Cease Operations during the Pandemic
When asked if they had to cease operations at all during the pandemic, 68.84% of our respondents said they had. This wasn’t as many as we were expecting, but it’s still the majority of construction businesses.
This is likely due to restrictions that were placed on construction projects. Some projects and operations may have been cancelled or postponed following government advice, others may have been delayed/cancelled due to an inability to meet government guidelines or control health and safety risks. The last few months have also seen many people shield and self-isolate, so there have been fewer people available to complete work.
However, the good news is that almost all of these businesses have now resumed trading (41.42%), or — despite some operations being ceased — they didn’t need to stop trading entirely (23.45%). Only 3.97% of our respondents are still out of action after having to pause operations.
Around one-third of the business owners we surveyed haven’t had to cease operations at all during the pandemic.
80% of Businesses Cancelled or Postponed Projects
With so many businesses having had to cease operations at some point, it’s no surprise that 80.51% of the business owners we surveyed said they’ve had to cancel or postpone projects.
While this likely contributed to the decrease in turnover that so many businesses experienced, there could be a silver lining here. This could mean that there will be plenty of work available for construction businesses and workers in the coming months. Construction work has already resumed, and projects that have been delayed are going ahead.
Construction businesses have also experienced a decrease in demand during the pandemic (more on that later), with many domestic and commercial projects put on hold. There may be a drastic increase in demand as the risks of COVID-19 lessen, and workers and clients are able and willing to complete work.
Many Goods and Services Were Unavailable during the Pandemic
The availability of goods and services during the pandemic may have contributed to the reasons why so many construction businesses had to cease operations at some point this year. Almost 70% of our respondents said that they weren’t always able to get the goods and services they needed to carry out work.
These supply chain disruptions could have played a pivotal role in decreasing businesses’ turnover and bringing operations to a halt.
Most Businesses Have Changed Their Approach to Procurement
As so many businesses were unable to get the goods and services they needed to continue operations during the height of the pandemic, we asked if any of our respondents have changed their approach to procurement as a result.
Just over half (51.69%) said that they have changed their procurement processes in some way, while 48.31% stated that these processes have remained unchanged in their organisation. It was almost an even split, but the majority have changed their procurement strategies.
Of those that have changed their approach to procurement, 47.18% have tightened their risk management strategies when sourcing goods or services, 31.15% now look for suppliers that demonstrate COVID-19 best practices, and 21.67% said their procurement processes have changed in other ways.
We also asked our respondents if they have diversified their supplier base in response to the pandemic. A minority of just over 30% answered “yes”, but this could be something for businesses to consider, especially as trade and travel restrictions have caused so many supply chain disruptions lately.
Which Factors Had the Biggest Impact on Construction Businesses during COVID-19?
We wanted to know how exactly COVID-19 has impacted construction businesses, so we asked our survey respondents which factors they’ve been affected the most by during the pandemic.
Travel/transport restrictions have had the biggest impact, affecting 42.24% of businesses. Following closely behind, increased operating costs and decreased demand have had the next biggest impact, with 40.26% affected by increased operating costs and 41.54% affected by demand.
These factors are understandable. We’ve already touched on the reasons for decreased demand, but travel/transport restrictions were introduced during lockdown, preventing travel even between different towns and cities. People were also advised not to use public transport. This may have stopped workers from being able to travel to work, and/or it could have prevented businesses from sending and receiving deliveries or working in different locations. There are still some local lockdowns and international travel restrictions in place that could be affecting the supply of goods and services.
As for increased operating costs, this could be a result of government guidelines, social distancing requirements, and extensive health and safety control measures needing to be implemented. Social distancing means fewer workers can be in one space at any given time, and procedures may take longer as a result. So the increase in operating costs could have had something to do with increased labour costs. Businesses may also have had to cover costs relating to control measures — the cost of additional PPE or adjustments to the workplace, for example.
Another factor that businesses claimed to be affected by was trade restrictions. 34.77% of our respondents said that this had been an issue for them. We can assume that this is because temporary COVID-19 international trade restrictions have prohibited importing/exporting goods to/from certain countries. Businesses may have had to find alternative suppliers or routes for deliveries.
Somewhat surprisingly, 15.64% of business owners were affected by increased demand. Whether or not this 15% were able to meet demand, this bodes well for the industry, and hopefully, demand will continue to rise.
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The Good News: Businesses Are Getting Back on Track
Our survey responses show that the pandemic has undoubtedly been difficult for almost all construction businesses. However, it’s not all bad news. The last few questions of our survey showed that business owners are generally positive about post-lockdown and post-COVID operations. Most businesses are confident about COVID-19 guidelines, most staff are back at work after being furloughed or taken ill with the virus, and most business owners don’t think the pandemic will threaten the success of their business.
99% of Businesses Are Confident about COVID-19 Guidelines
Over 99% of the business owners we surveyed said they were at least “somewhat confident” that their businesses and staff have successfully complied with COVID-19 government guidelines. 46.47% were “very confident” and 43.29% were “extremely confident”.
With practically all businesses confident about the guidelines and sure of how to ensure compliance going forward, this is great news for post-lockdown and post-COVID projects. This means businesses are mostly aware of how to operate safely while transmission risks are still present, so projects can go ahead without putting workers or site visitors in danger.
Most Workers Are Back at Work
Over the last few months, many workers have been furloughed or haven’t had the opportunity to work. Some have been unable to work due to shielding or quarantine, and some have even been off sick with the virus.
However, our survey results showed that at the majority of construction businesses (55.89%), all staff are back at work. Of the 44.11% that said not all staff are back at work yet, most (42.94%) said workers were still furloughed. Only 1.17% said that some staff are off sick with COVID-19 or COVID symptoms.
The Majority of Business Owners Are Positive about the Future
We asked our survey pool if they felt that COVID-19 has threatened the success of their business, and 55.31% said no. Most construction business owners aren’t worried about the future of their businesses.
Despite being in the minority, a fairly high percentage of our respondents said that they did feel that COVID-19 has threatened the success of their businesses.
Luckily though, there is support available to help businesses through these difficult times. If you’re struggling with the COVID-19 business landscape, CHAS may be able to help.
Get the COVID-19 Support You Need
CHAS is here to help you get through the pandemic and come out the other side stronger and more resilient. We’ve created several COVID-19 resources to support you and your business during these difficult times — including guides on creating a COVID-secure workplace and returning to work safely.
We’ve added a “Statement of Best Practice (COVID-19)” question set to the CHAS contractor portal, so if you’re already a CHAS member you can complete these questions to demonstrate your compliance and competence to clients.
Become a CHAS member to start benefiting from our support immediately, and access leading risk management resources and accreditation schemes.
