The coronavirus outbreak has had unprecedented impacts on many areas, including the UK construction sector. For months, the UK government restricted movements to limit the spread of COVID-19 and this put many construction projects on hold, resulting in job terminations, delays, and rising costs. The pandemic is still not fully under control in the UK and the construction industry is still recovering, but experts say the outlook is good as new growth within the industry is creating more jobs.
With that in mind, we are going to take a look at some of the ways the pandemic has affected building contractors:
Supply Chain Disruptions- restrictions on road traffic prevent construction materials from reaching constructions sites, which has resulted in delays. Shortages of one or two materials are enough to stop construction work completely. The shortage of drivers made the situation worse and also affected those in the supply chain, causing problems in their livelihood.
Labour Issues- workers found it difficult to reach construction sites. Large building contractors often sent workers to different cities throughout the UK and they remained in construction sites until the projects were completed. During the lockdown, the transportation system was heavily restricted, causing further delays. The situation has largely improved today but the impacts of the pandemic are still being felt. New regulations are being implemented in the construction industry, forcing workers to maintain adequate separation to prevent the spread of COVID-19 virus. This means, there are fewer workers assigned for each task. Without proper planning, these new regulations can cause delays and other productivity issues.
Financial Problems- many building contractors in the UK had problems making good profit due to delays, work stoppage, and incurred losses. Debts accumulated because contractors had to pay workers as well as suppliers for construction materials. A loss of profit has reduced tax collection from the construction sector and lower tax revenues made it necessary for the UK government to increase debts and this contributes to the decline of GDP.
Contractual Problems- problems caused by coronavirus outbreak are typically resolved by the Force Majeure clause in the contract. However, some clients have had different interpretations of the current situation. They have demanded the continuance of the project through various work adjustments. If building contractors are unable to meet these demands, they may face expensive penalties or other liabilities.
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To learn more, contact Shield Labour Solutions and speak with a payroll expert who can answer any questions you might have.
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