Construction Businesses Cut Costs for an Uncertain Summer Season
By Holly Welles
No one was ready for the viral pandemic that brought the world to a shrieking halt for the first few months of 2020. Every industry is struggling to come to grips with this new normal, trying to keep their heads above water when states mandate they close their doors.
The construction industry has been hit-or-miss during this pandemic. In some states, legislators consider the sector essential and allow it to continue to operate. In others, construction got lumped in with nail salons and movie theaters and had to close down for the duration. How are construction companies dealing with the pandemic, and how can they reduce operating costs during this upcoming summer season?
Pandemic Challenges in Construction
The pandemic is impacting nearly every industry in one way or another. In construction, supervisors and business owners often find themselves struggling to manage these challenges. Even in states where it’s considered essential, companies face delays, supply chain challenges, project suspensions and, in some cases, even cancellation.
Delays aren’t just costly—they can create more risks for individual businesses and the industry as a whole. Negative financial impacts are leading many companies to contemplate shutting down or considering bankruptcy. Unattended or unoccupied construction sites are vulnerable to damage from arson, vandalism, and natural disasters like floods and tornadoes.
The pandemic is also affecting the industry’s labor force. Job sites have to implement new safety measures to slow or prevent the spread of the virus. Anyone exposed to COVID-19 must self-quarantine, and most employers are offering paid time off, which is an additional cost for the firm.
Safety on the job site looks a lot different during a pandemic. Even the most mindful member of the crew may be averse to wearing a mask all day. Social distancing isn’t easy when teams are used to working shoulder-to-shoulder to accomplish their tasks.
Impacts Vary by State
Some states are faring better than others as the construction industry leans to navigate this new normal. Right now, only Michigan, New Jersey, and New York consider construction nonessential, but that hasn’t stopped other states from feeling the pinch. In Vermont, for example, nearly 49% of those in the industry are out of work.
Canceled projects in many states mean companies are forced to furlough their employees. While this does allow them to file for unemployment, in states like Florida, that process is nearly impossible. People who filed in March and April were still waiting for approval halfway through June.
Cutting Costs for Summer
What are business owners doing to cut costs as the industry moves forward into what is shaping up to be a highly uncertain summer season?
The Paycheck Protection Program helps enable business owners to continue to pay their employees even if business takes a downturn. This loan program is available to small companies and firms, and if they use it to retain employees or hire new ones, it doesn’t require repayment.
If the company plans to buy new equipment during this uncertain season, opting for used models rather than new may be more cost-effective. They won’t be the latest versions on the market, but used equipment is often just as effective while avoiding up to 40% of the depreciation costs the first owner paid.
Company owners should go over current and upcoming projects to determine which ones are likely to cancel, which are expected to be postponed and which will continue unimpeded. This isn’t a foolproof method, but it can be a valuable tool for any firm trying to make sense of the chaos and figure out how to best handle the upcoming summer season.
Now is also a good time to consider investing in project management technology to handle any changes companies decide to make. Some businesses might balk at the idea of spending more money right now without a guarantee that the industry will recover. However, the lack of work gives teams a chance to learn about and adopt new technologies without trying to balance education with projects.
Surviving an Uncertain Construction Season
Experts aren’t sure how long this pandemic will be around, or how long it might affect the construction industry. According to the most recent projections, this pandemic could linger until 2021, or longer if researchers run into troubles during vaccine development.
The uncertainty of the upcoming summer season could carry into next year and beyond. The best thing for companies to do right now is to take the necessary steps to cut costs and bolster their foundations to get ready for the long haul.
Holly Welles is a real estate writer who covers the latest market trends in everything from residential to commercial spaces. She is the editor behind her own blog, The Estate Update, and curates more advice on Twitter.