UK Construction Can Bounce Back

Brendan Sharkey, Head of Construction and Real Estate at MHA MacIntyre Hudson.

CONSTRUCTION FIRMS need to maintain cash flow and get creative with the COVID-19 relief measures, according to Brendan Sharkey, Head of Construction and Real Estate at MHA MacIntyre Hudson

One of the biggest concerns for construction companies are penalty clauses in contracts; the cost of missing a deadline can be substantial and the current Covid-19 working restrictions mean many projects will be late, says the chartered accountant.

Payments from larger companies to subcontractors will be slow in the current circumstances and everyone’s priority is to ensure adequate cash flow.

Firms seize the initiative

In his assessment of the current situation, Brendan comments: “The March Construction PMI showed the steepest decline in activity since 2008. In these very difficult times, the government’s relief measures may not be enough to ensure survival, but they will definitely help. Encouragingly most companies have seized the initiative and are taking full advantage of the Job Retention Scheme. However, getting a loan under the Business Interruption Loan scheme is arduous, if not impossible, either due to the number of applicants or the nature of the business.

“Companies should be open-minded and creative with how they maximise the various Covid-19 relief schemes. For example, if a business would ordinarily employ six surveyors but only has work for three it could furlough half of its surveyors for three weeks and then bring them back for the next three weeks while furloughing their colleagues. This would allow everyone some work while making the most of the Job Retention Scheme.

Construction bouncing back

Looking forward to the end of the current lockdown, Brendan is upbeat: “The construction sector should be able to bounce back quickly once the current Covid-19 restrictions are lifted: some work placed on hold can easily be picked up again.

“Construction also has it a little easier than other sectors because certain sites, especially smaller ones, can observe social distancing rules and work is carrying on. Even if there is much less work, some projects continue and this is providing smaller businesses with a lifeline. However, there is only so much time that businesses can operate like this before they fail.”