GlobalData: despite improvements, construction still facing challenges
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GlobalData surveys: despite improvements, construction still facing challenges

By GlobalData 10 Jun 2021 (Last Updated June 10th, 2021 15:08)

While the Covid-19 pandemic prompted government measures that supported the construction industry, Covid-19 restrictions created challenges.

The impact of the Covid-19 pandemic on challenges for construction industries around the world resulted in a 2.4% contraction in real output value in 2020. The extent of the damage across sectors varied considerably, with energy and utilities and infrastructure construction recording an average growth of 2.3% last year while commercial, industrial, institutional and residential construction recorded an average contraction of 5.5%. The disparity is not unsurprising given the widespread increase in government public works expenditure that occurred in response to the pandemic, which is predominantly captured by the energy and utilities and infrastructure sectors. However, while these government measures provided vital support for the construction industry, other measures generated new obstacles for construction enterprises to overcome.

Polling by GlobalData suggests that adherence to government regulations features prominently in the challenges faced by the industry to resume normal operations on disrupted works. Social distancing requirements, movement restrictions and complete lockdowns have been widely enacted by governments since the beginning of the pandemic. Though these measures have curbed the spread of the coronavirus, the increase in expenditure to ensure worksites align with Covid-19 safe regulations and restrictions on operational capacity hampered an already fragile recovery. Also affecting the timely resumption of construction works is the general increase in materials prices that began last year, an issue that shows no sign of abating in the short term. Construction cost indices have surged since late 2020, with resurgent global demand and increasing commodity prices driving the rise. Contributing to the upward pressure on materials prices and emerging as the most prominent issue in GlobalData polling is the disruption to global supply chains, with lead times for materials orders and global shipping rates increasing sharply this year.

The extent to which these challenges currently affect construction enterprises is mixed, according to surveyed respondents. Of those surveyed, 25.7% responded that despite suffering disruption to their operations, work has now returned to normal. The majority of respondents, 48.6%, however, report that they continue to face difficulties in their attempts to resume normal operations, with 35.1% of respondents encountering minor obstacles and 13.5% reporting continuing major disruption to works. The most surprising of the responses is the significant proportion of respondents, 25.7%, who reported no disruption due to the Covid-19 pandemic whatsoever.

Disruption to construction works over the course of the pandemic was an inevitability, however, current sentiment among construction enterprises points to the beginning of a steady improvement. Many of the most pressing issues identified are likely to be transitionary such as rising materials prices and supply chain disruptions, which should eventually diminish as pent-up demand tempers and supply shocks dissipate. However, this recovery hinges on maintaining control of the pandemic, accelerating vaccination programmes that have lagged across much of the world and preventing a widespread resurgence of the coronavirus, such as that seen most recently in Asia-Pacific.


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