What Will Change in Indian Construction Industry Post Lockdown?
May 3, 2020
According to various developments and news as on date the lock-down due to the COVID-19 outbreak is being extended till the end of May in many areas, and the situation is expected to normalize with removal of lock-down in another month only with significant betterment of the COVID-19 outbreak situation. As per the current context this implies a two months’ complete stoppage of the projects without accounting the time for reinstatement to fully operational mode, which may not be less than another thirty days.
Situation on the Face
The realistic image is going to be a bit different as demand of situation will vary largely. According to a recent excerpt of Kris Gopalakrishnan, the co-founder of IT giant Infosys, to the media that over a million of IT employees will continue to work from home even after this coronavirus-inflicted lock-down situation returns to normalcy, clearly indicates a strong reduction in the demand of commercial buildings. The question mark is big for residential projects of all statures where the ultimate buyer is the common people and the demand is bound to see a valley, with considerable reduction in flow of money to the common people’s pocket.
Fund flow from Government or big private clients is expected to change. The new priorities will be healthcare, disaster management and other dependent sectors rather than commercial or residential buildings. Infrastructure projects are expected to see boom according to a recent announcement of the Central Transport Minister.
Contractors executing projects that are currently midway will definitely seek for clarity on fund availability from clients, and projects of non-priority sectors are feared to have extended timeline, or trimmed set of features, or even the both to the worst due to reduction or redirection of fund.
Time lost for the ongoing projects
Considering the direct stoppage of works due to lock-down till end of May and subsequent time for reinstatement it is estimated that projects can be in a state of full operation mode not before last week of June, provided the Corona outbreak comes within control by then. This implies almost three important months are gone, that’s too when there are no other hindrances like monsoon or temperature issues and the progress is usually high!
For ongoing projects even if the clients guarantee the fund availability, difficulty in execution is still unavoidable for the contractors. Let us take an example of a project of 24 months’ original contract duration in which already one year has passed before lock-down and thus having 12 more months to complete will now have three months less in hand to execute those works. There is a strong chanc