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Challenges posed by COVID-19 in the construction industry

By Jamie Johnson, CEO and co-founder of FJP Investment – a leading provider of UK and overseas property investment opportunities. 

The repercussions of COVID-19 are being felt across the entire globe, in every industry, and in every household. For those of us involved in the construction industry this presents a real uncertainty. Businesses and investors are rightly questioning how and when projects that are currently under development will continue.

Both the UK Government and construction industry membership bodies have been quick to offer assistance in multiple ways. However, even with the most generous relief, there’s no real possibility that the touted ‘house-building revolution’ planned by the UK Government will be underway anytime soon.

But the absolute best advice remains the same: do not panic. More business relief measures are likely to be unveiled over the coming weeks, depending on how the UK COVID-19 outbreak is contained. Importantly, as part of Chancellor Rishi Sunak’s first budget as chancellor, significant investment was committed to support the ongoing regeneration of Britain by building the correct infrastructure.

For so many of the national issues affecting the UK, the construction industry has a prominent role to play. So how can those businesses affected by COVID-19 seek assistance? And what further action can be implemented by the Government to support those feeling the pressure?

The industry rallies together

At times of crisis like this, membership organisations have an opportunity to step up and truly demonstrate their value for both their members and the industry as a whole. In the case of COVID-19, it’s safe to say they have achieved just that.

The Civil Engineering Contractors Association (CECA) and Build UK released a joint statement on the 16th of March detailing what actions they were taking to provide those in the construction industry with help they need to economically sustain themselves through these difficult times. The measures were wide-ranging, but perhaps the most helpful was their commitment to providing information on Force Majeure and other contractual clauses.

The importance of such an act cannot be understated. Those unable to fulfil their contractual obligations through no fault of their own are all now needing to rely on such legal clauses to escape undue legal repercussions.

Force Majeure is normally seen as the ‘go-to’ clause for those seeking contractual relief, however the text usually stipulates that the party at legal fault must provide an exhaustive explanation connecting their inability to complete with the circumstance out of their control. Given the interconnectedness of material supply chains and the constantly developing nature of this global pandemic, proving this link to the standard originally required may prove intensely difficult for some smaller firms.

This is why it is so important that membership organisations begin to standardise their member’s legal obligations with regards to this pandemic. By providing much-needed clarity on force majeure to firms now hamstrung by the economic implications of COVID-19, it can begin to establish the legal nature of the coronavirus with regards to construction contracts to the relief of thousands in the industry.

Providing leadership, direction and guidance

The government, thus far, has shown that it understands the needs of businesses in the UK in these times of great economic strain. Business relief measures have already been put into place for a number of those affected, including generous business tax rate relief.

However, I believe the greatest thing the government can do is simply re-affirm its commitment and belief its own hailed ‘house-building revolution’. For those in construction; being reminded of the UK Government’s long-term plans when it comes to infrastructure investment will provide a much-needed confidence boost and encourage businesses to look beyond the initial challenges COVID-19 poses.

UK property can only thrive with the help of the construction industry

UK property has always proven to be a popular destination for domestic and international investors seeking safe and secure assets that also offer long-term capital growth. Just like we saw during the global financial crisis, the property market will undoubtedly recover from the challenges COVID-19 presents, and this will result in an increase in demand for bricks and mortar. This is why construction firms are a bedrock of the national economy and an important driver of economic growth and productivity.