COVID-19: The Impacts on the Construction Industry

Just last week, the U.S. Senate passed the Coronavirus Aid, Relief, and Economic Security Act (CARES). In a whirlwind month of developments, this legislation reaches into many aspects of construction operations. According to the AGC, some of the implications of this newly released aid package to the construction industry include potential project delays and cancellations, challenges to paying employees and overhead costs, and repurposed funding for operations and administrative expenses. 

 A recent PriceWaterhouseCoopers assessment also analyzed the construction industry impacts that are occurring due to the virus. This study concluded that 68 percent of construction and engineering CFOs felt that financial impact, including effects on results of operations, future periods, and liquidity and capital resources was a top concern. Part of PwC’s recommendation is to “Consider divesting non-core or possibly underperforming assets or assessing mergers and acquisitions (M&A) prospects as potential sources of cash.” 

Supply chain weaknesses, labor shortages, and the need to restructure debt are other issues that may cause disruption, at least in the short-term. But there are ways forward. An article in Construction Dive notes that construction-related firms “should be playing for the long-term, because the short-term will be somewhat short on opportunity,” but optimistically notes that firms that can adopt an entrepreneurial mindset and prepare by accounting for their time, assets, and money carefully can best shield themselves against the worst of the impacts. 

 In this environment of urgency, MagikMe Equipment can help ease the pain in the following ways: 

• Manage disposition of current assets: Our Disposition and Remarketing custom data analysis can help determine the disposal “sweet spot” for assets in your fleet.  
• Understand the residual values of your fleet: When considering the sale of idle assets and unused inventory, our Residual Values Guide can help you preserve the value of assets and free costs such as insurance premiums, while maintaining more liquidity.    
• Understand your equipment costs: Our Cost Recovery Guide can enable you to accurately determine ownership and operating costs for cost recovery; while our Rental Rate Blue Book instantly provides active rates, standby rates and idle rates for all your project-dedicated equipment, so you can confidently submit rates for reimbursement. 
• Optimize the future of your fleet: Update internal charge rates (to tighten up estimation and upcoming bids) using our Internal Charge Rate Calculator. 

Although the signposts have certainly changed in respect to the economic outlook for the construction industry, and for the risk of recession at large, our guidance from a recent (pre-coronavirus) post still stands: the adage of “the best offense is a good defense” applies here, and there are many steps that you can take to improve your standing in the market during good times, and difficult times. 

 To learn more about how we can help make better decisions on these issues in these uncertain times, schedule a free demo with us. Learn more.