Being paid as a construction contractor is not easy even ignoring the coronavirus situation. Contractors have to face cash threats in the coronavirus. In the following blog, we will take about the thing that will impact the business and what needs to be done for the survival of a business:
Reasons Coronavirus Affect Construction Business
Let’s have a look at the four main reasons due to which the construction business will be affected due to COVID-19:
1-Delay in Materials and Jobs
Coronavirus has spread across the globe. The number of cases is rising day by day and there is no sign of slowing down. This situation has affected the business around the globe and the construction business is also affected.
One of the main problems is the delay in the supply of material due to which the delay in working will happen. The problem rises in China and China represents a third of global manufacturing and we have seen the production delays in the work and the same goes for the construction work. For the construction projects estimate, you need to connect with an experienced company in your area.
2-People Staying in Quarantine Will Impact Working
As the coronavirus is spreading, there is a huge chance that people will become sick and they have to quarantine. Currently, massive quarantines are happing around the globe and people are locked down in their houses. As the employees will be sick and they will not come to work, so ultimately the work will be delayed. More importantly, the government of the countries has announced the lockdown so all the construction sites will be closed.
Below are the ways in which the quarantines and personnel availability will affect the construction jobs:
- Sick workers will not come to the job.
- Workers may have a fear of working even if they unhealthy because a large population is affected by the disease.
- Quarantines will make it difficult for people to work.
- Quarantines will affect sureties, governments, and developers.
There is no doubt the local regulation, quarantines, and illness will slow down the job and it might potentially shit down the business. Contractors might go to the site but there will no person to work.
Furthermore, as working is stopped, so there will be a delay in the payments. People will be looking to get the payment but there will be no way to get them on the time due to the current situation.
3-Wide Economic and Market Challenges
The risk of recession is very much in six to seven months as compared to the time of 2007 according to experts. There is slow economic growth globally in 2020. It is important to note that there will be a serious downturn in light or residential commercial projects if individual discretionary spending is limited.
4-Legal Problems and Protections
The construction industry is in a mess. The economic uncertainty and logistical problems will increase payment problems. When pressure is created on one person, then the pressure is felt by everyone and the company payments chain is squeezed hard to the bottom.
Due to the pandemic, there will be a supply chain disruption, delays in work, delays in payment, and many other problems.
Steps To Be Taken By Construction Business During COVID-19
You can survive in this situation by taking some important steps. Below are the four important things that a company needs to do regarding this condition:
1-Inventory and Address Legal Issues
Your business will have immediate legal issues and challenges that need to be addressed right now. You will have live jobs and construction contract obligations. It is essential for you to do an inventory and ensure that you have protection against the negative impacts that will be seen in the next few weeks or any you are facing right now.
It is important for you to get in touch with a construction attorney regarding this stuff and prepare to survive and thrive during the coronavirus. Furthermore, if you are looking to get the construction takeoff services, hire a competent company to get the work done on time.
2-Be Strict Regarding Protecting Lien Rights
It’s time to be strict about protecting your lien rights. Whether you get paid or when you get paid is dependent on various things because things are not in control. During this scenario, you need to keep the following two things in your mind:
Send Preliminary Notice: Preliminary notices are very much important and they will help you to protect against the payment problem on a job especially for the problems that are not your fault.
When Payment is Pinched, Pull Trigger: If any of the payment begins the drag on any of your projects, then it’s time to pull the trigger and do everything to protect your rights. In this condition, you have to send notice of intent to lien or file a mechanics lien.
3- Stretch Your Cash Cushion
Cash is the king in the entire scenario. Without it, no working can be done. But to ensure that things are under control, you have to stretch your cash cushion. You should do the following things:
Buy material for the long term: You need to take advantage of programs that let you buy material on long term payment. You need cash for the jobs throughout 2020.
Working capital loans: You need to take quick action for applying for working capital loans even if you don’t have the right to do it.
Check SBA Loans: SBA is preparing for loan repairing for a contractor that is being impacted by a coronavirus.
Get cash for slow-paying accounts: Most of the contractors are working with the slow-paying jobs. Try to change this out for cash now.
4-Monitor General Contractor Payment Behavior
The general contractors on the job will have to go through a lot during these uncertain times. They will be struggling with the project schedule, work shortage, and legal disputes.
It is essential to keep a close look at the behavior of the general contractor. Look at the following things:
- Are they slowly giving pay to the contractors?
- Do you see an increase in the payment problem?
- Do you notice any retainage practices changing?
This is a very crucial time for the general contractors and this the time for them to shine as well. Note that the behavior of the general contractor will have an impact on the overall business.
These were the important things that you need to consider for surviving during the coronavirus pandemic.
If you are in search of preliminary estimating services, then you need to get in touch with a professional estimating company to get the work right according to your desire.