How construction companies can use plug and play model to survive coronavirus crisis

Published: June 10, 2020 1:55 PM

The construction companies should invest efforts to increase the resilience of their business models and may focus more on the plug and play solutions like prefabricated ducts and utilities.

construction sector, building, coronavirus crisis, Covid 19The extraordinary situation necessitated construction companies to extend their welfare activities to provide care and succour to their workforce.

By Prakasan TP

The COVID-19 pandemic has unleashed an unprecedented calamity across the world. While we have already started seeing the impact on human lives and business continuity, it is too early to estimate the cost of lockdown due to the coronavirus. The Indian economy is under severe pressure due to the countrywide lockdown that took place. It is widely believed that the disruption in economic activities will result in modest revenue growth in Q4-FY2020. Like other sectors of the economy, the construction sector has been badly jolted by the pandemic.

The Indian construction sector – the biggest job generator next only to agriculture – employs over 51 million people, which is close to 12% of the nation’s working population. The sector also has a multiplier effect on nearly 250 allied industries, which makes it critical for the Indian economy. With construction activities majorly constricted due to the lockdown, which extends from March second week to May-end, the major impact of the pandemic will be visible in the Q1-FY2021 results. 

As the sector grapple to continue operation, the utmost priority of a company is to secure the health and safety of people. Firms are using digital technologies to network, virtual meetings, co-work, and collaborate. However, construction firms have more challenges at hand due to social distancing and restrictions on mobility, which has a restriction on the workforce to continue work at sites, resulting in productivity loss.  

Extending the welfare net

The extraordinary situation necessitated construction companies to extend their welfare activities to provide care and succour to their workforce. Many construction companies have expanded the welfare net to provide water and food for sustenance besides medical, sanitation, and other facilities. The situation has been exacerbated by the need to maintain social distancing, which has forced construction firms to implement preventive measures to contain the spread of the contagion. From maintaining distance and use of sanitizers and face masks to regular fumigation of sites, the construction companies have undertaken a host of activities to prevent the disease from spreading. 

Road to recovery

While the current situation seems challenging, there is no denying the fact that the construction sector will play a catalytic role in the recovery of the Indian economy in the post-lockdown world. The sheer size, and the large workforce that it employs, makes it critical for the Indian economy. The government of India has announced an Rs. 20 lakh crore stimulus package to revive the badly hit economy, which includes aids for the construction industry.

In a big relief for the construction workers, the state governments have been directed to utilise the welfare fund with a corpus of Rs 31,000 crore. Reserve Bank of India’s decision to cut lending rates by 75 basis points; Rs. 30,000 crore liquidity infusion in the non-banking sector; 25% reduction in existing TDS and TCS rates (releasing Rs. 50,000 crores); and the government’s proposed investments in the infrastructure segment are all expected to provide the necessary tailwind to facilitate the sector’s recovery. The government has also instructed all central agencies like Railways, Central Public Works Department to provide an extension of the deadline, up to six months, with no costs to the contractor.   

The Government of India’s decision to allow limited construction activity from April 20 onwards has provided some relief to the labor-intensive sector. The move would kick-start recovery and help the construction companies recoup from the shock induced by the COVID-19 pandemic. The pandemic is a big learning opportunity for all. While planning their recovery roadmaps, the construction companies should invest efforts to increase the resilience of their business models and may focus more on the plug and play solutions like prefabricated ducts and utilities, etc. to improve the quality and speed of project execution.

Prakasan TP is CEO, MEP Business, Sterling and Wilson Pvt Ltd. Views expressed are the author’s personal.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
15G trials: IB’s two demands that Huawei, ZTE will find difficult to fulfil — And that’s how India plans to trip China
2The future workplace will be very different, courtesy Covid-19
3‘Global Bharat’: SAP’s new tech initiative to make MSMEs globally competitive