By Marwan Bejjani, Alessandro Borgogna, and Elias Karam
The COVID-19 outbreak has hit the construction industry hard. Contractors face budget overruns and delays, due to lockdown measures and strict hygiene and distancing restrictions resulting in low productivity. Construction materials are taking longer to source, due to reduced manufacturing output and other supply-chain issues. These are difficult challenges, but contractors in the GCC need to balance short-term measures to survive the crisis with medium-term measures to prepare for the eventual recovery.
The ultimate impact on the GCC’s construction industry is still unclear, but we estimate that contractors in the region could lose approximately $30 billion in revenue (20% of the GCC’s total construction market for 2020) if the current lockdown remains in place for three months. If it extends through the end of 2020, the revenue impact would be about $65 billion, a drop of around 45%.
Many factors lie beyond contractors’ control. Nonetheless, management teams can take five initiatives over the coming months to cope with the crisis and prepare for the recovery.
The COVID-19 epidemic has been a massive disruption to the construction industry, but it will eventually end. By taking these steps discussed above, contractors can limit their losses during the crisis and emerge stronger for the future.
This article originally appeared in April 2020 on MEED.