Ben Derbyshire writes for Housing Today and BD Online: implications of coronavirus for the industry?
What are implications of coronavirus for the industry?
By Ben Derbyshire | 26th March
With experience of three recessions Ben Derbyshire analyses what the fall out from the current crisis could mean for the industry in the short, medium and long term
As I write this, the four offices of HTA Design LLP are effectively closed and our team of 225 or so are either working from home, or in the case of a small number of support staff, furloughed.
Reports are coming in of a constant stream of sites closed, and projects postponed. As a 66-year-old asthmatic, I’m working a full day but from the bottom of my garden and remote from colleagues with whom I keep in touch via Microsoft Teams and other digital media. The mantra is business as usual, with management meetings, design and technical reviews scheduled as normal, and every effort made to meet clients’ information requirements. Our server rooms are kept alive, receiving remote instructions to update big BIM files throughout the day.
I have worked continuously through various manifestations of the practice, which I joined 1973. In that time, we have weathered three major recessions; in 1980, 1990 and of course 2008. Each of those lasted five quarters with lingering impacts in the aftermath, and we had really only just recovered from the last one when covid-19 struck in the first quarter of this year.
I have learnt the lesson to act quickly and decisively, not to hang on in the hope that things may go on as before and come right of their own accord. Never before, though, have the changes necessary been so radical as in the case of this pandemic. So, in this month’s column, I’m taking a look at some of those, the short- and medium-term implications and the long-term legacy, where I’m searching for silver linings among the storm clouds.
By the time you read this, I feel certain that the debate about health and safety on site will have concluded with the wide-scale closure of building sites. I have always felt that Gordon Brown, and Richard McCarthy, then director at the Department for Communities and Local Government, were not given adequate credit for pumping billions into the housing sector, effectively saving the industry from collapse, in 2008. Grant rates were ramped up, deals were done that kept the builders building. But closing sites to prevent the spread of infection is effectively a spanner in the works that threatens to bring the entire development industry supply chain to a grinding halt.
We need measures to prevent the industry from descending into a blood-bath of contractual disputes
Upstream of site operations, investment decisions, bids, acquisitions, consultant appointments and construction contracts are on hold. Downstream, in housing, sales will dry up. It remains to be seen whether the cocktail of government support that has already been announced can keep the low-margin, cash-flow-dependent businesses in the supply chain afloat for the duration. Taking into account the thousands of self-employed and immigrant workers, myriad SMEs already struggling for want of credit, alongside the majors with their precarious finances, the prospect seems overwhelming. The chancellor has come out fighting, but there are many rounds to go yet and continued, and yet greater, Treasury support from his corner will be essential.
From the perspective of the architectural profession, the hope is that pre-construction commissions will hold up as the industry builds a stock of production-ready projects for when the supply chain starts to move again. Certainly, our new enquiries at HTA Design seem to suggest this may help to offset halted or postponed projects. Right across the industry we will need to be alert to the risk of lost capacity that would hinder the re-start when it comes. The furlough system is a real help, but if the industry runs out of cash there will be no jobs to return to.
The industry was already suffering from acute thrombosis in the flow of cash to suppliers and consultants and we have got used to having to work really hard at our ageing debtors list. Now we are threatened with a fight for survival and government must stiffen its policy framework around late payment in support.
Between us, we are going to have to find a way through a forest of challenges ahead. I’d prioritise two of these ahead of the rest. We need measures, formal or otherwise, to prevent the industry from descending into a blood-bath of contractual disputes, seeking to offset losses with claims and counter-claims for delay. We need some sort of blanket provision for force majeure, clarifying the definition and ensuring this is applied, even where contracts and appointments do not specifically invoke it. And then we must ensure the planning system does not stall because committees can’t meet and planning officers are not able to write and submit reports. The dearth of resources in local planning authorities, drained by years of austerity, leaves them ill equipped to substitute virtual systems for physical ones.
What of the future and those silver linings? I feel sure we will see the back of some unfortunate old habits and wide uptake of new behaviours many of us have been slow to adopt. Will we learn that avoiding the weirdly instinctive annual migration to Cannes, like much other business travel, will be no great loss? Undoubtedly, we have all been catapulted into virtual meetings and project reviews so that this has become routine rather than, for some of us at least, exceptional. Cycling is a great way to get about, maintaining social distancing rules on the move. Some cities around the world, and I hope our own in Britain will follow suit, have cleared designated routes of motor traffic to enable this. As a result, the air is cleaner and public transport less in demand – a lasting legacy, we may dare to believe?
Most of all, my hope is that the sense of mutual support we are all experiencing as a result of the challenges of isolation will carry over into a lesson learnt in business as much as in society. We strive to be collaborative in the built environment professions and the more enlightened players in the industry do make an effort to think in terms of partnership and shared problem solving rather than mutual recrimination, blame and buck-passing. Nature is teaching us all a lesson in how we must behave out of respect for human life and for those whose job it is to preserve it. Let’s carry that with us for the future.