The impact of Covid-19 on the Middle East construction industry
At the start of the global pandemic this year, the construction industry in the Middle East did not appear to be as heavily affected as it was in other parts of the world. However, as the year has rumbled on, the impact has reached the market, and compounded by pre-existing challenges, represents a particularly gruelling set of circumstances for contractors and project owners to contend with.
The challenges and opportunities of construction in the GCC
As you likely know, the Middle East construction industry has been an exciting place in recent years. There are interesting and forward-thinking projects across the literal and metaphorical landscape that keep the industry growing in a dynamic way.
However, it has also had its challenges. Fluctuating prices have made the industry more competitive than ever, making the need for careful project and contract management vital for commercially viable outcomes.
How Covid-19 has impacted the Middle East construction industry
These are the things that have made the impact of Covid-19 potentially more precarious to the industry. As in all areas, Covid-19 has hit supply chains, put a freeze on spending and made working in close proximity almost impossible. This is a particular issue in construction because a ‘buddy system’ is an established safety principal.
As a result, while new contracts in the GCC amounted to well over $6 billion in value in April 2019, this April the value had fallen 40%. Meanwhile, forecasts for the whole year fell dramatically as well with new contracts worth nearly $130 billion expected in GCC for 2020 at the start of the year being revised to just over $80 million recently. Naturally, this has had a devastating impact on the industry as a whole, and especially those who are midway through a project and facing costly delays or even claims.
Supporting the Middle East construction industry with consultancy and cash
However, all is not lost. Showing the fortitude that so many of us recognise as an innate part of the character of those in construction, individuals and organisations have sought ways to assess the damage, limit it, and surge forward stronger.
Central to this has been two things:
- Access to capital when things don’t go to plan and disputes arise so that they can be solved efficiently, effectively, hopefully amicably and without impacting the bottom line of the project.
- Strong project management on existing projects to help prevent issues arising in the first place.
The benefits of this checks and balances, prevention and cure approach should not be a surprise to anyone. However, knowing it and achieving it are two separate things, and it all starts with knowing who to ask for help.