Construction

The Paycheck Protection Program (PPP) has been a useful tool in helping construction contractors weather the COVID-19 pandemic. As of June 30th, over 466,000 loans have been issued to industry companies totaling more than $64B. These numbers are stunning and reflect not only the depth of economic impact but also the popularity of the program.

Over the past few months, Atlanta construction contractors have been dealing with the business challenges arising from COVID-19. Managing unexpected and sudden jobsite closures, changing safety guidelines, and ongoing labor shortages have put contractors in a precarious position. Many have had to revisit contracts for those jobs which have been delayed/canceled to assess exposure.

When the COVID-19 pandemic arrived in Georgia many construction projects were delayed or halted due to new orders and restrictions. Although the CDC has published workplace safety guidelines for job sites, states have been struggling to determine the optimal combination of health and safety requirements.

Heading into the second half of 2020, the construction industry is bracing for slow growth and continued business disruption. Contractors are looking at lower revenues, tighter profit margins, project delays and cancellations, and potential workforce shortages as COVID-19 fluctuates.

The impact of the COVID-19 emergency including containment efforts have created challenging situations for many Atlanta businesses, both initially and through reopening. During the first weeks of forced business closures and shelter in place orders, individuals and businesses were required to significantly change everyday patterns. Not only were local stores, restaurants and gathering places closed, but many did not want to risk going out for fear of infection.

The impact of the COVID-19 forced business closure and stay at home orders have created difficult conditions. Almost overnight businesses were forced to endure significant changes to their business model which came with difficult decisions about expenses, employees, and the future. While much of the attention has focused on the retail, restaurant, and hospitality industries the construction industry was also sharply impacted.

As the COVID-19 emergency measures phase-out and the state continues to reopen, contractors and construction companies are looking to position themselves for the future. While there are many considerations that need to be made to comply with state and local guidelines, management is also spending time reviewing cash flow strategies.

In the construction industry where finding skilled labor has been a persistent issue for years, it appears the disruptions are also taking a toll. According to the Associated General Contractors (ACG) Coronavirus Survey Results, construction employment has reduced by 29,000.

The construction industry is still looking for ways to solve the worker shortage puzzle, an issue plaguing the industry. The problem started when the recession hit the industry hard resulting in large scale layoffs leaving qualified workers with no future job prospects. When the economy changed when the demand for new residential, commercial and other projects increased there were far fewer workers available. This has left many looking for new ways to fill the gap through more aggressive compensation and recruiting, as well as, the introduction of enhanced technology.

The answer to this important question will vary between companies and industries. There are some Atlanta companies that naturally face higher fraud exposure because of the type of business, how services are delivered and where the opportunity for fraud occurs. Whatever your industry, it’s important to understand your company’s risk profile and areas of opportunity for fraudulent activities.  While most focus on growing the company through strategic planning, new business development, customer service, and account management, it’s imperative not to overlook this important exercise.