Impact of COVID 19 on Construction and aligned industries


Construction industry is one of the biggest industry in the country contributing around 8.2% in Indian GDP. It is also lifeline for many sub industries in the country like, Hardware, Architecture, material producer etc. This industry also a great contributor in employment in India, as per official record construction industry employs around 44 million workers, which makes it the second largest employer in India. Due to such gravity of this industry whenever something unfavorable strikes to the county, construction industry is one of the first who must take the impact of such strike. Talking about the strike, whole world is currently fighting against one of the severe pandemic in the history so as India! And it is very much likely that construction industry in India has impacted largely as well.

Impact of COVID 19

When we evaluate the industry: public construction / projects are likely to continue same as before for a short run as all the companies will try to avoid the liquidation damages or some penalties. Also many companies has a practice to reserve resources for ongoing projects based on which these short term project will get completed. However, work is expected to affect soon as supply chain are disrupted due to shortage of subcontractors and materials. Parallel public agencies and administrations has begun to terminate contracts to control cost. On the other hand companies involved in residential and non-residential projects faces different short term stress, as they have very limited choice in this situation to conserve cash, many of them have already stopped the projects and they have very limited visualization on how to revive. In Construction industry there are two kind of players, 

– Long-term construction companies 

– Contractors. 

Here, in this blog major focus is on the long term companies, companies who have invested in the industry or have long term projects in hand to get commercialized. As we evaluate more about the impact of this pandemic it is evident that long term construction companies in the industry will have to struggle with reduced demand in the market due to

Although some companies may be able to execute on the backlog of projects, but if we talk about the pipeline, it is expected to be weak for the coming near future. Due to which

What has impacted due to lockdown?

Unlike the service sector, construction sector requires the physical presence of a large workforce – both skilled and unskilled – in concentrated circles. There are, generally, low levels of technology integration in such projects, which fall even lower in government and public sector projects. Below are the few impact due to lockdown across the country

Reviving strategy

So if I summarize above information, then it is curtain that industry as impacted and impacted badly due to various reasons like – supply chain, cash flow, Labour issue, Safety issue etc. But as an industry this is the perfect time to bounce back and help each other in reviving by thinking something out of the box and break the stereotypes. Think on what we all can do to come out of this and restart with aiming the larger goals.

We have thought of some of the tactics which might help companies from construction industry to focus on revving back. 

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Jaysheel Buch, is Chartered Accountant working as a Strategic Business Consultant covering small to large organization across India. Apart from financial consulting his key work areas are Financial modeling and Analytics. Numbers are his playground, where he plays with them in such a way that they seems super easy. Apart from finance, he has also worked in Operational as well as Strategic areas and benchmarking for the clients organization.

About J.hirani: J.hirani is a Strategic Transformation team which works as a growth partner for different organisations in various industries by providing services like Agile transformation, Scenario mapping, Strategic alignment, Balance scorecard, Digital transformation, Incubating new ventures, Operation excellence and Aligning human capital.

©J.hirani, Impact of COVID 19 on Construction and aligned industries, July 2020. All rights reserved

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