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The good news is that a number of successful vaccines have been approved, millions of inoculations are planned to take place in 2021. It could take the best part of six months to a year until a substantial number of jabs are accomplished in the US & worldwide. The once in a lifetime COVID-19 pandemic will not quickly vanish, it will start to gradually start to diminish in the 1st & 2nd Q’s of 2021.
For the best part of 2020 the COVID-19 virus has pounded and slammed the brakes on the global economy and society. More than 180 countries have been impacted by this pandemic. A handful of countries have successfully navigated their way around the pandemic, while the vast majority of countries have significantly struggled with the costly effects of the virus.
Construction Facility Owners, Architects & Engineering firms, Construction Managers, Contractors, Construction Professionals, Workers, Vendors & Suppliers have wrestled with the impact of COVID-19 for most of 2020.
2020 has been an extremely damaging year for the Global Construction sector. Cancelled & delayed projects, thousands of construction professionals & workers have lost their jobs. Unfortunately, this disruption / slowdown will continue well into 2021. That being said, the COVID-19 outlook is still somewhat negative as we move into the 1st Q of 2021, however we are slowly starting to see slow but steady improvements in most country’s construction sectors around the world. The current thinking is that things will be better in 3 to 6 months from now.
The COVID-19 virus has been responsible for anywhere from 30% to 60% of ongoing construction projects around the world to be closed down or delayed since mid-March, we are starting to see most construction work increasingly starting up again as we move into the 1st of Q2021.
Compass International has been working hard in monitoring the impact on the Global Construction Industry to keep you up to date with facts and data that will assist you and your employer weather this once in a lifetime storm and to succeed in 2021.
The UK has reached a “BREXIT” trade agreement with the European Union (EU – 27 remaining countries), just 7 days before it was planned to leave one of the world’s biggest trading blocs.
Number of confirmed cases worldwide has reached more than 80 million
Number of worldwide deaths has exceeded 1.75 million
We have seen 1, 2 & in some cases 3 shut downs in a number countries
The cost related to project cancelations, mitigation measures, cleaning protocols & personal protection materials, reduced productivity & lost profit opportunities is estimated to be in the $5 billion to $10 billion range.
Impact on Construction
Residential / General Construction Single Family Homes, Apartments, Warehouses etc. this type of construction represents 53% of overall annual construction activity.
Industrial type Construction Refineries, Power Plants, Pharmaceutical, and Government funded infrastructure type facilities this type of construction represents 47% of overall annual construction activity.
Commercial / Residential Construction includes privately funded Single Family Homes, Apartments, Shopping Malls, Supermarkets, Offices, Hotels, School and Warehouse type projects have not been severely impacted by the COVID 19 pandemic.
Industrial Facilities, Process Plants, Refineries, Manufacturing / Energy type projects, Government / State funded Civil-Engineering Roads, Bridges / Tunnel type projects and Governmental Institutional & Military type funded projects are a different situation. Smaller work crews, continuous wearing of PPE that requires numerous water breaks / cool down periods, additional bussing requirements from worker parking area to actual site entrances, additional site offices related to a distancing requirement’s, cleaning protocols & 6’ / 2 meter social distancing & additional site staff to ensure COVID-19 compliance are the root causes of this problem.
Industrial Construction projects will on average take longer to accomplish, a 12 month typical construction schedule will take anywhere from 14 to 15 months to complete post COVID-19.
As we move into 2021, we are possibly moving into a new “normal” that still needs to be fully understood. We believe COVID-19 will have a major impact on how Construction Projects are bid, procured and executed in the foreseeable future.
If the majority of these concerns can be resolved or put to rest, then the Global Construction Industry has an excellent chance to grow & prosper in the next 2 to 5 years particularly in some of the 2nd & 3rd world developing economies of South East Asia, Africa & South America. However, the current global war on the COVID-19 needs to be won before this can be realized & this might take another 6 or more months before this happens.
| Countries | 1sth Q 2021 % GDP Growth | 1st Q 2021 Inflation % | 1st Q 2010 Unemployment % | Comments on Construction in 1st Q of 2021
Future Spending Activity |
| USA | 1.7 to 2.5 | 1.2 – 1.6 | 5.5 – 6.5 | Unemployment is decreasing rather rapidly. The 1st Q of 2021 will continue to be challenging as the US construction sector tries to come to terms with the pandemic & the new normal. Engineering & Architectural firms are reporting a significant slowdown of RFQ’s / new orders as we move into 2021.The bad news is that COVID-19 confirmed cases are rapidly increasing. The good news is that a number of successful vaccines are being dispensed |
| CANADA | 1.7 to 2.1 | 0.6 – 0.8 | 8 – 9 | A slow advance in consumer and business confidence is expected in the 1st Q of 2021, look for the effects of COVID-19 to start to receded. Continuing low oil prices will negatively impact Canada’s oil patch. New RFQ’s / Bidding opportunities on commercial type projects should present themselves as we move further into 2021. |
| BRAZIL | Minus 1.3% to Minus 2.5% | 4.5 – 5.5 | 12 – 14 | A laissez-faire response to the COVID-19 pandemic aided business & the economy but caused a high infection rate & many fatalities. Brazil is now has the 3rd largest number of COVID-19 deaths worldwide. The full scale of the economic impact of the deadly COVID-19 on Brazil is still TBD. Regrettably, COVID-19 has the potential for all Brazilian future or ongoing construction projects to be delayed, deferred or cancelled. Look for construction unemployment to increase in the next month or two. 2021 construction activity looks to be down from pre-COVID-19 levels. A/E & CM firms are reporting a sizable drop off in RFQ’s / Bidding opportunities / new orders as we move into the 1st Q of 2021. The latest thinking is that it will take at least 6 months to see any economic improvement . |
| UNITED KINGDOM | 0.2% to 0.4% | 0.8 – 1.1 | 4.6 – 5.5 | BREXIT terms & conditions have finally been completed with a deal between the UK and EU. Once the COVID-19 pandemic is resolved, in say 3 to 6 months, the UK economy & construction sector could be in a growth spurt. The pound sterling is starting to strengthen against the US Dollar. |
| GERMANY | 0.2% to 0.4% | 0.2 – 0.4 | 4.3 – 5.5 | German economic & construction activity once the COVID-19 virus is alleviated is expected to improve, however this might take another 6 to 9 months. A lot of industry experts believe BREXIT will not be a good outcome for the German economy & construction sector, time will tell. |
| FRANCE | 0.2% to 0.4% | 0.2 – 0.4 | 8.2 – 8.5 | France & the rest of the EU have reached agreement on the terms of a deal on BREXIT. This could have ramifications on the French economy & construction sector. France has struggled with high unemployment since 2008. COVID-19 is an additional challenge. The full scale of the economic impact of the deadly COVID-19 on France is still TBD. This virus couldn’t have come at a worse time as France has struggled economically for the last 10 years. Engineering & Architectural firms are reporting a significant fall off of RFQ’s / new orders as we move into 2021. Many industry experts believe BREXIT will not be a positive result for the French economy & construction sector, they believe the UK will be more competitive than France, again only time will tell. |
| RUSSIA | Minus 1% to Minus 2% | 4.3 – 4.8 | 6.2- 6.7 | Russia announced in August that it had produced a COVID-19 vaccine (Sputnik COVID-19 vaccine), that went into full production in September. Russia is starting to see a 2nd wave of COVID-19 cases, it is currently reporting over 3 million confirmed cases and more than 25,000 deaths. Russia has closed its borders to foreigners in recent weeks. A severe fall in the Russian Ruble after the dramatic oil price drop is still TBD. The virus has the potential for all Russian future or ongoing construction projects to be delayed or the worst case cancelled. |
| JAPAN | 0.1% to 0.3% | 0.1 – 0.3 | 2.6 – 3.3 | Japan has withstood the COVID-19 reasonably well with just over 200,000 confirmed cases and close to 3,000 deaths. The Japanese economy & construction sector is still underperforming. The 2020 Olympic games have been cancelled hopefully until mid-2021 |
| CHINA | 2.9 to 4.9 | 2.5 – 2.9 | 3.8 – 4.2 | China’s economy and construction sector has recovered quickly, painstaking lockdowns and population tracing policies checked the spread of the COVID-19 virus. The Chinese economy & construction sectors are starting to see decent growth again, not as good as pre-COVID-19 levels, but still positive. The ramifications of the global economic impact of the deadly Coronavirus Pandemic is still TBD. Many US / European & Japanese manufacturing companies have plans to relocate their production facilities out of China, stay tuned. |
| INDIA | 2.5 – 2.9 | 5.8 – 6.7 | 6.3 – 6.6 | The potential of border hostilities with China is a major concern. India continues to purchase advanced fighter jets & weapon systems, which is not a good sign. India has been hard hit with more than 10 million confirmed cases of COVID-19. Many Indian planned or ongoing construction projects need to be reevaluated, delayed or in the worst case canceled. Prime Minister Narendra Modi has earmarked a $2 + billion fund to mitigate the effects of the Coronavirus Pandemic on the Indian population & industry. |
Compass International is considered by many to be the global leader in providing construction cost data. We partner with many of our clients to train their staff on Conceptual & Detailed Estimating methods, Validate Estimates and to Turnaround problem CAPEX projects.
Eliminate the risk of cost overruns with Compass International’s researched and current US & International construction cost data.
Compass International’s staff of Estimators, Cost Engineers and Planners spend thousands of hours of construction costs research to develop our (8) construction cost data bases. In addition, we have a network of Construction Professionals / Consultants / Estimator located in more than 20 countries providing us with real time cost data, all of our data is supplemented with feedback from Project Control Professionals, Estimators, Q.S.’s, Architects, Engineers and Construction Managers around the world. This comprehensive research supports us in validating our construction cost data library. Our updated construction cost data will assist you in your estimating / budgeting efforts, removing any concern of future construction cost overruns.
Our (8) 2020 Construction Cost Books & PDF’s are now available.
Visit our website http://www.compassinternational.net/
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To contact the Author of this newsletter or to enquire about our (8) Publications & Cost saving services, contact John G. McConville CCP – in USA call (609) 577 4505 or contact me on [email protected]
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