Construction Industry in 2021 – Steering Projects to a New Normal

The construction industry in India is the second-largest employer after agriculture employing about 51 million people and contributing ~9% to the Indian GDP. The industry already known to suffer from improper planning, delays, cost overruns, inefficient project management, unrealistic tendering, lack of technology, unskilled labor, and supply chain bottlenecks is now victim to the COVID-19 world crisis. The pandemic and lockdown have not been kind with the residential, commercial, and infrastructure projects. As per McKinsey, “the global labor-productivity growth in construction has averaged only 1% annually over the past two decades as against 2.8% and 3.6% per year growth of the world economy and manufacturing respectively.” Thereby builders, interior designers, architects, contractors, site project managers are joining hands to save the construction industry from its impending doom.

Friends and relatives of Kushwaha family who work as migrant workers walk along a road to return to their villages, March 26, 2020. Image credits: REUTERS/Danish Siddiqui

The Impact of COVID-19 construction sector in India

Several companies are still struggling, but some less than others due to their planning and preparedness. Before COVID 19 jeopardized the industry, India was to become the third-largest construction market in the world by 2025. So far, India’s growing population, urbanization, rise in disposable income, and empowering women to buy homes have contributed to the industry growth.

Further, incentives like 100% FDI allowed in the construction development sector and initiatives like Smart Cities and Housing for All have also contributed positively to the industry. Since the global economic crisis in 2008, the industry has once again suffered unparalleled losses in 2020. The Impact of COVID-19 on interior design projects and construction projects include: –

  • Disruption in the global supply chain has impacted the imports of materials like tiles from China and furniture from Italy.
  • Mass exodus of migrant workers returning to their villages to work as farm labor has put most ongoing project work on hold.
  • Over 18000 project sites that are almost at a standstill will result in handover delays and additional costs.
  • Strict social distancing norms on the project site have affected the number of employees at every site.
  • An additional cost for employers to get regular RT-PCR tests done for all persons working on site.
  • Major drop in the sale of residential and commercial units since 2020 leading to blocked-up capital for builders and lesser work for interior designers.
Image credits: Freepik

Steps taken by Project Managers, Civil contractors, Architects, Interior Designers to keep the industry running

Project Owners/Managers, Civil contractors, Architects, and Interior Designers are working to deliver completed projects. Conquering COVID-19 and construction can happen only through a thorough assessment of its impact on operations, effective coordination between multiple project stakeholders, and an in-depth response plan for issues rising from the pandemic. Here are some tips on how project managers, Civil contractors, Architects, Interior Designers are managing projects in COVID-19: –

1. Re-analyzing project finances

With restrictions on imports, have you considered the new material cost at a premium? Are you able to provide on-site food and accommodation to the labor? Will it add to your cost or balance off against a limited workforce? Do you have enough amount of cash in your reserves to take on new cost elements? What is your project plan for covid-19? With major projects on hold due to covid-19, it is important to re-analyze the project finances.

2. Close communication

Now is the time to communicate closely with all project stakeholders. From builders to project owners, lenders, contractors, suppliers, and employees, communicate more often. Let everyone understand how they need to contribute to tide over the current situation. It is equally important to stay in touch with the customer who has invested in your project to upraise him/her of the delay. Communication, through Zoom, WhatsApp, or email, is essential to keep everyone updated at all times. Let the challenges faced by project leaders during covid-19 be communicated to one and all.

3. Preparing to adopt latest technology

The construction industry India is one of the least technology-forward and digitalized sectors. The COVID-19 situation is forcing the industry to adopt the latest technology. From online presentations to drones and 3-D printing, the construction industry must quickly embrace technological advances. Today, technology has proved its importance as several project participants work from home with laptops, coordinating with contractors, site managers, etc. It is a fact that lack of technology in construction projects leads to 10% wastage of materials, 30% of rework on-site, and 40% of unproductive labor that results in escalating project costs much over budget and 90% delays in project delivery.

4. Developing a core product

Today, controlled expenses are replacing large purchases in purchase of residential and commercial units. Which means will high-end residential or commercial units continue to find buyers and investors, or will the demand shift to affordable houses and offices? It is time to develop the core product that will be leaner across the board to help you survive the pandemic. As an interior designer have you started with e-designs, eco-friendly designs or designing coworking spaces?

5. Justifying the pricing

An emerging issue is the ability to justify the price of a product or service. Understanding the perceived value and translating it into a price value will be the utmost. People will not blindly pay any amount till the markets stabilize. Though the pent-up demand will tide the industry over difficult times, the actual surge in demand will probably take years. Till then, price matters!

Conclusion

What appears to be a long haul in transforming the industry must begin now. Areas like the lack of social security system for informal workers, technology improvements, larger government infrastructure projects, and policy change will be essential to lift the industry out of another recession. But when forces unite to overhaul the age-old industry, the prognosis has to be positive. The Indian construction industry is in full readiness to win yet another battle and save it from doomsday – with a NEW OUTLOOK in the NEW NORMAL!

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