By Rebekah Morris for AZBEX
Construction continues on sites throughout Arizona while other industries have paused amid COVID-19 restrictions. Here are the locally observed impacts so far:
In–person networking events and pre–submittal meetings have all but dried up. Drastic measures are being imposed to limit personal interaction. The City of Phoenix has canceled all in–person pre–submittal meetings not required by law. More municipalities are moving them to conference calls or virtual meetings.
All industry events, including major awards banquets have all been canceled or postponed. From the AZRE RED awards to the Ranking Arizona awards, scheduled spring golf tournaments, monthly association meetings and even our own in–person industry events are either moving online or being rescheduled.
Business Impacts – Too Early to Tell
Every executive interviewed for this story consistently told us it was too early to determine the impacts of the COVID-19 pandemic. Acknowledging the obvious, a broad economic slowdown will undoubtedly hit the A/E/C industry as well. Despite this acknowledgement, the sentiment this early on is that “It is business as usual; we are adapting to any restrictions and will continue to deliver on our contractual obligations.”
Changes in Procurement and Bid Opportunities
From today’s issue of AZBEX, anecdotally, public procurement activity is starting to change. In addition to most pre–submittal meetings being moved to a virtual delivery, specific procurements are being canceled or postponed. Typically, we would expect between zero and two cancelations of a public procurement. In today’s issue, there are four postponements or cancelations.
The largest procurement postponed is the $120M CMAR services for the City of Phoenix Cave Creek Water Reclamation Plant. According to Patty Kennedy, Deputy Director for City of Phoenix Wastewater, the site visit was canceled due to the size of the group expected, and once that was canceled, the decision was made to postpone the entire procurement. Kennedy stated that this procurement is likely to need several months before it is reissued.
Supply Chain Issues Expected
Deliveries of building products, especially ones manufactured in China and Italy, are expected to be delayed due to their economic shutdown caused by the virus. The most impacted items will be those that cannot or are not manufactured anywhere else. Most contractors we spoke with expect to be able to overcome this; however, a major elevator manufacturer already broadcasted that their projected delays will stretch months.
Related to building products manufactured overseas, many operational items needed to keep contractors going are becoming delayed. For example, a hardware set up for new employees that took about a week to secure is now expected to take one to two months.
Scarcity of Protective and Site Hygiene Equipment and Supplies
The same N95 respiratory face masks used by contractors operating within OSHA guidelines are also being consumed at a rapid rate by the healthcare industry. Scarcity and prioritization of healthcare deliveries over construction companies is happening.
Additionally, all forms of construction site hygiene items like handwash stations and hand sanitizer stations are on backorder with estimated delivery times of several weeks at least.
Future Opportunities Will Appear
The impacts are real and will continue to be discovered as the public health epidemic continues to unfold. Thankfully, the Arizona brand and economy are robust and diversified. Seasoned industry professionals who made it through the Great Recession are prepared to handle whatever the economy and world events throw at them. While slower to appear, new business opportunities will come from this, whether it be from the healthcare or logistics industry, or government stimulus spending directed towards construction projects.