Asia's COVID-19 approach reveals lessons for projects and programmes
Although it seems like an age since China diagnosed its first COVID-19 cases, the pace of change since governments first took action has been rapid, requiring quick decision-making for those managing projects and programmes across real estate, infrastructure and natural resources.
As this global pandemic moves across the rest of the world, parts of China are starting to come back online following periods of shutdown. Governments in the West are – rightly – looking at the approaches taken by Asia to protect their citizens.
The construction sector must follow that advice – responding quickly to restrictions, but also focusing on how projects can get back out of the blocks when the situation improves.
Doing so relies on swift reactions, good communications and acting collaboratively in the interests of the whole supply chain.
In China in particular, the speed and totality with which the authorities put the country into lockdown, did not allow time to prepare. What it did, however, was force teams to react collaboratively to limit the fallout.
The results have been largely a success: for the majority of live projects in the construction phase we are looking at a six to eight week delay, broadly reflecting the length of the country’s shutdown. Only one project that we are working on is seeing an extended delay.
This has been achieved by using the shutdown period wisely. With sites shut overnight in many cases, teams quickly divided resource into those managing that process and those focused on the bounce back.
Through swift risk reviews and supply chain stability testing, we have been able to use the time productively – assessing inventories, logistics, shipping and financial stability of essential labour and material providers, so that orders and programmes are ready to go when they get the green light. In the main, clients have responded well to this advice and will now benefit from being first out the traps as sites reopen.
Acknowledging that projects will come back online steadily – not all at once – is important for this process too. In Hong Kong, which did not see total lockdown, measures such as temperature checks, heightened personal protection equipment (PPE) and digital ticketing systems have enabled teams to get essentials in place ahead of further easing of restrictions.
In China, we are now seeing 80-90 per cent of labour back on sites for some projects and this is improving each day.
A collaborative attitude and team management skills have been essential throughout the pandemic. Suddenly you have multiple stakeholders, all working remotely using different systems, making the risk of dislocation very high.
It’s important to be flexible, recognising different client preferences in how to communicate, and arranging regular calls and check-ins where decisions can be made.
On global programmes – especially natural resources projects where decision making is often centralised in key regions – this crisis has made us recognise our industry’s ongoing reliance on travel.
In some cases, we’ve changed working hours so that teams in Houston are effectively working night shifts to match its time zones. When dealing with restrictions of this scale, you can’t afford to have decisions held up by geography.
For projects not yet under construction, strategies like these have allowed us to keep on top of schedules and minimise delays to just two to three weeks.
Again, in natural resources where investment has been only recently switched back on, a large number of projects are still not at the stage of a final investment decision (FID). Although the global drop in commodity prices will affect forward programmes, work to prepare for a FID has been able to continue with good communications.
Supporting the supply chain
The other benefit of regular and two-way dialogue is to make sure teams understand the pressures that other colleagues – either within an organisation or in a partnership – are under.
If we are to make sure that our periods of delay are short term, it’s essential to keep relationships intact.
Understanding contractual positions, risks and liabilities is important, but our experience in Asia is that it hasn’t been necessary to enforce terms or resort to legal action: it has very much been a case that we are all in this together.
Government support has smoothed the way on this point. Singapore's Building & Construction Authority issued advice since the very early stages of the crisis, to shore-up public sector contractors and make clear that financial penalties around cost or schedule overruns wouldn’t automatically be enforced.
Other governments and clients globally are now taking that lead, allowing much easier conversations to take place about how to get projects back on track.
In Hong Kong this has been matched by early commitments to supporting supply chains as they get back on their feet – including speeding up planning applications and approvals, and even forward funding up to ten per cent of overall contract values on some state-funded projects, in order to re-capitalise the sector.
Our message to both public and private clients is that if you are in a position to support your supply chains at this time, you should do so.
There is an expectation that some private clients will take longer to get back to normal, making government-backed investment in sectors such as healthcare, research & development and infrastructure critical to the recovery. Smart private investors will be looking for opportunities to partner on these secure pipelines.
Please visit our COVID-19 response page for all of our resources relating to the impact of COVID-19 on the construction sector.