COVID-19 A Wake Up Call for the Engineering and Construction industry

Every once in a while, we face disruptive events that force a rethink on how we run businesses. In the recent past, these have been new and emerging disruptive technologies that have changed the way we conduct business and often created new opportunities and in some cases challenged the survival of traditional businesses.

What we are facing now is an unprecedented situation with COVID-19. Since its detection in December 2019 to the date of writing this article, there have been close to 200,000 cases of infections and 8,000 fatalities. It has spread globally and resulted in borders, entire cities and towns being locked down and businesses having to close or force working from home, to avoid the risk of the infection spreading. The collateral damage on global supply chains and the business environment has been one of the epic proportions.

What exacerbates the situation for businesses is the fact that we do not know how long this is going to last and therefore, a radical shift in terms of the way businesses operate is the need of the hour. Unlike technology-led disruptions where businesses can plan their transition over a much longer period of time, the current situation led by COVID-19 forces an immediate rethink.

The Engineering and Construction industry will face monumental challenges in the current context. This industry is characterized by diverse project locations, movement of staff and labour across different projects based on skills required, and reliance on global supply chains and vendor networks to provide items and materials. It also remains a significant employer of at all levels of skill and is a key contributor to national GDPs.

In our assessment, the following are some of the important challenges the E&C industry will need to address on a war footing and create a new paradigm of work:

Health & Safety

Defining new protocols and processes that mitigate the risk of COVID-19 infection transmission at construction sites. They would necessarily need to cover high-priority incident reporting and escalations as well as enable contact tracing. Potentially, companies would need to revisit their method statements to assess any risks related to these.

Supply chain disruptions

The ability to identify potential supply chain issues (delayed deliveries, logistics, etc.) early on and assess the impact on work plans becomes critical. Businesses will have to have closer relationships with their supply chain partners so that any potential issues can be acknowledged as quickly as possible.

Travel and Remote Working

As the current situation unfolds, there may be disruptions to travel plans arising from transport cancellations and unavailability, border controls, etc. While the physical deployment of personnel to construction sites would be a continuing challenge, managers and executives would need to be able to operate remotely to keep businesses going with minimum disruption. This would necessitate staff being able to work from home or while being mobile.

Contractual Disputes

Generate an ability to identify potential issues arising out of the current disruption cycle and their effect on contractual obligations in respect of scheduling, timing, and completion of work, cost escalations, and compensation events.

Process Integration for an increasingly mobile workforce

Traditional business systems require a lot of manual intervention and engagement. In an increasingly remote-working-based environment, these would consistently create critical points of failure for an organization, resulting in delayed decision making, increased cost, long process cycle times which would ultimately result in margin and cash flow erosion.

In light of these challenges, Engineering and Construction businesses must re-evaluate whether their business systems and software provide the necessary components and integration between them to ensure that they can navigate these troubled times effectively. This examination must be detailed and rigorous to assess their processes and systems for:

1. Integration Gaps where manual intervention or document flow in necessitated
2. Offline processes and spreadsheets being used which are not easily trackable and traceable
3. Automation and document flow across process and departmental boundaries
4. Support for remote working environments
5. Closer working and digital integration with supply chain partners comprising Vendors and Subcontractors

One thing is for certain, the current crisis will force Engineering & Construction organizations to re-engineer for a tectonic shift in the way they operate, and, where they are slow to transform, could face some extremely challenging times ahead.

For further reading on comprehensive digital transformation, please click here.