Construction companies adapt to Covid-19

Construction sites began to reopen earlier this month. But construction companies are still trying to find ways to adapt to a struggling market in the short and long term (iStock, Pixabay)

When engineering giant AECOM started developing a virtual consultation tool in late 2019, its goal was to empower members of the public to influence projects remotely. The idea at the time was that busy schedules prevented some from attending critical public meetings.

“It was originally intended for stakeholders who cannot physically come together,” said Kevin Carlson, who heads AECOM’s digital transformation department. “There was no broader thinking” beyond that, he added.

But by the time AECOM released the tool in April, the world had changed.

Kevin Carlson, AECOM

Kevin Carlson, AECOM

The coronavirus crisis created a sudden demand for technologies that allow public and private meetings to be held remotely – and what was developed as a convenience quickly became a necessity.

Now, as construction sites that were closed during the pandemic reopen in New York and other major cities, construction companies face unprecedented pressures.
From leading companies to the smallest entrepreneurs, the $ 1.3 trillion industry must respond not only to immediate safety and health concerns, in addition to cost overruns and project delays, but also to the need for ‘industry-wide reform.

Industry professionals say construction companies will increasingly need to embrace new technologies, as well as supply chain and materials alternatives to survive an economy heavily affected by Covid-19.

“This race to make up for lost time and recoup some of the lost revenue is a very real thing that every developer is experiencing right now,” said Alex Elkin, founder of construction consulting firm Eastbound Construction.

“It will be a long term event,” he added, “and we are just getting started.”

Land without Luddite

Even in the short term, the construction industry has had to adapt to new technologies in direct response to the pandemic.

At various sites across the country, project manager Suffolk Construction, which has offices in major cities like New York, Boston, Miami and Dallas, uses monitors that workers wear on their helmets, for example. Monitors set off alarms whenever workers are within six feet of each other.

While there were mixed responses at first, many eventually saw the benefit of being able to track contact between construction workers, according to Alex Hall, executive vice president of enterprise systems at Suffolk.

Alex Hall, Suffolk Construction

Alex Hall, Suffolk Construction

This was the case on a 518,000 square foot hotel and condo project in Montana, where a worker was diagnosed with Covid-19, he said. The company was able to determine who may have been exposed to this person based on whom the helmet alarms were triggered.

“As soon as that happens, and the reality of the situation hits home, it changes the psyche on the site,” said Hall, whose company is working on 200 projects nationwide.

Despite the industry’s reputation for resistance to change, interest in construction-oriented technology has grown dramatically, from the use of hard hat and drone alarms to 4D and 5D modeling.

Since 2008, investors have invested more than $ 27 billion in the country’s construction sector, according to global consultancy McKinsey & Company.

KP Reddy, CEO of Shadow Ventures, an Atlanta-based company that invests in construction startups, said he believes the pandemic will help change the industry’s “cultural resistance” for long-term progress.

Building information modeling, for example, can allow developers and architects to reschedule projects delayed by crisis to potentially make up for lost time and help reduce costs. And a number of start-ups offer site image and video capture services, enabling remote inspections. Large companies like AECOM and Skanska even have robots employed to do some demolition work and bend rebar.

KP Reddy, Shadow Ventures

KP Reddy, Shadow Ventures

Reddy said tools that automate certain aspects of construction could gain popularity as contractors look for ways to reduce the number of people at a given site.

At a more basic level, the crisis could accelerate the digitization of the construction management process.

“There is going to be a fundamental overhaul of the types of projects being built and how, within that framework, everyone in the construction industry has to work together,” said Zachary Reiss-Davis, who manages product marketing. for Procore, a construction management software company, would be valued at over $ 4 billion.

Barry LePatner, founder of construction law firm LePatner & Associates, noted that a majority of US construction companies have fewer than 20 employees. He said only companies with deep pockets and larger workforces can afford to systematically invest in new technologies.

“You’re talking about a small percentage of better-run businesses that are trying to boost productivity,” he said. “While the tech world has gone to great lengths to develop and refine this technology, the level of adoption is significantly lower than it should be. “

Carlson of AECOM said that while he expects some changes to the build process, such as remote meetings, to be temporary, he has found that customers are more open to trying new ones. tools.

“The comfort level of our customers is increasing. This will allow us to do more in the future, ”he said. “We are seeing a change. The impacts will be long lasting and we are excited to know where it will take us. “

Phased supply chains

Projects remain under unprecedented scrutiny as construction begins to resume at sites, particularly in urban markets.

Alex Elkin, Eastbound Construction

Alex Elkin, Eastbound Construction

Eastbound’s Elkin performed due diligence for lenders and private equity partners concerned about the impact of the coronavirus on project timelines and budgets.

“You have lenders that are frankly terrified of what’s going on right now,” he said. “Time has turned and debt service has increased. “

The start of work on tens of thousands of sites in New York City alone is also likely to strain supply chains, further delaying projects.

About 30 percent of building materials imported to the United States come from China, according to construction research and software platform Dodge Data & Analytics.

But many manufacturers have gone out of business due to the pandemic, and a growing number of entrepreneurs may be looking to depend less on foreign suppliers. LePatner said he expects supply chains to be disrupted at least next year, until new manufacturers appear in North and South America.

Linda Foggie, Turner and Townsend

Linda Foggie, Turner and Townsend

Linda Foggie, director of the New York office of the international construction consultancy firm Turner & Townsend, said that due to the stoppage of work on the sites, supplies have not been as limited as feared initially. She said entrepreneurs shouldn’t worry too much about buying supplies from the United States only, but should make sure they have multiple reliable sources for different types of products.

“The important thing is that your supply chain is diverse,” she said.

Foggie added that modular construction and other off-site construction could gain momentum in major markets like New York City, as part of broader efforts to reduce density at project sites.

The market share of permanent modular construction on real estate projects in North America increased by 50 percent between 2015 and 2018, according to McKinsey, although the industry’s labor share remains in single digits.

During Zoom panel hosted by The real deal in June, Sidewalk Labs CEO Dan Doctoroff argued that city and state regulations also need to catch up with advances in construction technology.

He pointed out that solid wood is a potentially economical material that is widely banned in all five boroughs because New York does not allow towers made with this material to exceed six stories.

“There are a lot of technologies and new approaches today,” Doctoroff said. “If the government could just go out of its own way and work with innovators, they could do a lot of amazing things. “


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