Impact of COVID-19 on capital projects, construction programs

Implications for construction projects and capital expenditure programs

As the impacts of the novel coronavirus (COVID-19) pandemic continue to expand, businesses are struggling both to adjust to new ways of life and to grasp what this will likely mean for their operations—especially their construction projects and capital expenditure programs due to their multi-faceted components. How business and government entities that exist along the construction program life cycle respond to COVID-19 is changing hourly, with more businesses and government entities forced to run with skeleton crews or shut down altogether.

There will be delays, loss of efficiencies, and cost impacts because of COVID-19 and related regulatory responses, and there is little to no precedent to help companies understand what the potential future impacts of COVID-19 on the capital project and construction programs may be, or when restrictions may end. Some contractors, subcontractors, suppliers, and sources of labor may not be affected yet because they have not been told to shut down or because they are considered “essential” for government work. However, it is very possible that at some point, work may need to halt due to health and safety concerns. Even if project planning, design, and management do not stop altogether, work will likely be more costly and take more time.

As the COVID-19 virus affects capital project and construction programs and daily business operations, we offer insights as to actions you can take now.

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Opportunities in a shifting construction planning, design, and management landscape

Look beyond challenges for potential opportunities to advance response, recovery, and delivery confidence:

• Drop-in fuel prices may reduce costs on active projects
• Local lockdown or other orders that reduce public traffic and occupation levels may allow projects to pull more expensive, off-hour work to regular shift work or allow otherwise disruptive work (major street or throughway closures, power and water shutdowns, or work that violates standard noise and vibration limitations) to take place with less encumbrance
• Unexpected availability of workforce or equipment stock in the market may allow for acceleration of your project and reduction of costs for traveling resources 
• Leverage full technological capabilities of project management platforms to facilitate remote working and make digital capital products and cloud collaboration the standard on projects
• Revisit procurement strategy and consider whether delaying certain procurement activities (commodities, fuel, service providers, subcontractors) may yield more competitive pricing
• During project shutdowns, revisit or develop project governance playbooks and implement or enhance project management software platforms
• Have plans ready for new projects to take advantage of a potentially slower construction market when conditions start to improve

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Next steps for the new normal

As the COVID-19 virus affects capital project and construction programs, project stakeholders should be vigilant and proactive in navigating the uncertain situation. Communication among project stakeholders is critical. Understanding your contractual rights and carefully documenting delays or other impacts can better position you to reestablish operations when your project recovers and business returns to normal.

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