INSIGHT

COVID-19 impact on construction industry globally

By Terence Zhou, Leighton O'Brien
COVID-19 Infrastructure Property & Development

In brief 8 min read

The COVID-19 outbreak continues to have a massive and evolving impact across all industries globally, including the construction industry. Many countries, including Australia, have imposed strict lockdowns for industries other than essential services, in an effort to stem the spread of the virus.

In Australia, construction is being treated, in effect, as an essential service. Indeed, the NSW Government has reinforced this with its recently announced commitment to continue work in the infrastructure and construction sector, notwithstanding the COVID-19 pandemic, However, further changes are expected to be announced and come into effect in NSW on 1 May.

Ahead of the next phase, we have set out below a summary of the COVID-19 impact on the construction industry around the world, noting that this is broadly reflective of the broader issues that each jurisdiction is currently facing.

Australia

Status

Continuing

Details

Current status

In Australia, construction is continuing. Construction is not classified as a 'non-essential' service that is required to close (see National Cabinet Stage 1, Stage 2, and Stage 3 announcements). Furthermore, NSW and VIC have allowed building work to be carried out on weekends or public holidays to reduce the impact of social distancing (see order).

Generally, each state and territory has implemented its own specific public health and biosecurity measures, on a largely consistent basis, as empowered by the relevant public health and emergency response laws.

In NSW, the stage 3 coronavirus lockdown measures (see order) came into effect on 31 March and will last 90 days. These lockdown measures specifically allow for 'work if the person cannot work from a person's place of residence' and define an essential gathering as a gathering at an … construction site that is necessary for the normal operation of the tenants within the …site'.

The NSW Government has declared further commitments, including:

  • further infrastructure stimulus commitment of $10 billion;
  • fast-tracking approvals and streamlining processes to move 'shove and screwdriver ready projects' forward; and
  • improved payments system throughout the supply chain to ensure liquidity.

Permitted working hours have also been extended in NSW and other parts of the country (see media announcement).

Further changes are expected to be announced and to come into effect in NSW on 1 May.

Impact and state of play

Broadly, the legislative framework allows construction to continue as per usual in Australia. However, this does not necessarily obligate construction to continue under statute. Contractors should also review their respective project contracts to determine whether they are contractually required to shut down the site in these circumstances.

Furthermore, workers on a construction site will still need to comply with other public health orders / rules to the extent that these are applicable (eg workers may still be required to quarantine/self-isolate when returning from travel).

Finally, as NSW and VIC construction can now take place on weekends and public holidays, contractors should consider how to best allocate workforces to minimise health risks while working to practical timelines.

France

Status

Continuing

Details

In France, the initial two-week lockdown put in place on 17 March has been extended until 11 May. The lockdown orders (see decree) allow people to go to work if remote working is not possible. On 21 March, the Government reached an agreement with three major construction employer groups to allow the continuation of projects while observing the protection of employees.

However, the media reports that many large construction projects have closed since the initial 16 March decree (see link).

Hong Kong

Status

Continuing

Details

In Hong Kong, construction work is continuing as of 16 April 2020. The newest material measures for social distancing and shut-downs came into effect on 29 March 2020 (see regulations here). These regulations ban public group gatherings unless an exception applies. A gathering at a place of work for the purposes of work is an exception.

Italy

Status

Closed other than for certain exempt services in particular regions

Details

Businesses across Italy have been closed down except for 80 sectors (see decree here). The original shutdown was scheduled to lift on 3 April, but has now been extended to 3 May. The exempt sectors include:

  • electrical, plumbing and other construction installation activities;
  • electricity, gas, steam and air conditioning supply;
  • repair and installation of machinery and equipment;
  • civil engineering;
  • sewerage; and
  • other essential public services.

The decree does not appear to affect the provisions of specified earlier decrees.

Media reports indicate that certain construction sites remain open or have re-opened with extreme safety precautions as of 15 April (see link). These vary between region: eg in Liguria, a strong push for construction sites to reopen has seen the reopening of some shipyards (see link); and in Lombardy, construction has continued on hospitals, roads and railways (see link).

Japan

Status

Continuing on a case-by-case basis

Details

On 7 April, Japan declared a state of emergency (SoE) until 6 May in Tokyo and a number of neighbouring prefectures.

Essential activities and facilitie includes banks, grocery stores, postal services, pharmacies and public transport. It should be noted, however, that most of the SoE measures are requests and instructions, and cannot be legally enforced.

While some major construction projects, such as Japan's maglev rail line, have been brought to a halt, other companies have stated they will keep their construction sites open as a general rule (see media report).

New Zealand

Status

Closed except for essential services and critical infrastructure

Details

From midnight on 25 March, New Zealand entered Alert Level 4 for 'at least four weeks' and effectively closed non-essential businesses.

Building and construction work can only be completed during this time if it meets the definition of an essential service. In the building and construction sector, this is defined as (see Government Guide):

  • any entity involved in building and construction related to essential services and critical infrastructure, including those in the supply and support chain;
  • any entity involved in any work required to address immediate health or life safety risks, or to prevent serious environmental harm, and relevant essential supply chain elements; and
  • any entity with statutory responsibilities or that is involved in building and resource consenting necessary for the above purposes.

The Government Guide provides further detail around these essential services. Critical infrastructure includes electricity, gas, water and waste water. Essential services include food processing, food distribution, supermarkets, dairies and pharmacies.

Singapore

Status

Closed other than for essential goods and services

Details

From 7 April 2020 until at least 4 May 2020, all workplace premises will be closed unless they constitute an essential service (or their supply chain or related service providers) (see Ministry media release here).

The list of essential services can be found here, and the 'Construction, Facilities Management and Critical Public Infrastructure' section relevantly includes:

  • companies involved in epidemic control;
  • development projects that support essential services (eg water, gas, or sewerage works) or national security;
  • selected critical stage development projects (eg deep basement excavations, deep tunnelling works) but these should be wound down to a non-critical stage; and
  • critical public infrastructure, public safety maintenance and services, and emergency repairs and maintenance.

Entities that continue to operate under an exemption are still required to submit details of a plan to operate with enhanced safe distancing measures by 13 April.

South Africa

Status

Closed other than for essential goods and services

Details

The majority of construction sites are currently shut down in South Africa.

As of 2 April, the South African Government has imposed a nation-wide lockdown during which all businesses must cease operations, unless that business is related to an essential good or service (see regulations here). The list of essential goods and services is found in Annexure B of the regulations, and includes:

  • electricity, water, gas and fuel production, supply and maintenance;
  • cleaning, sanitation, sewerage and waste and refuse removal services; and
  • critical maintenance and repair of essential services (eg hospitals, groceries, necessary financial services),

but does not specifically include construction.

Indeed, media reports note that construction sites have been shut down as a result of the lockdown, excluding those relating to power, water and sanitation infrastructure. The shutdown began on 26 March 2020, and will currently end at 11:59pm 16 April 2020.

United Kingdom

Status

Continuing

Details

From 23 March, the UK Government increased measures to minimise the spread of the virus, passing regulations requiring various businesses to close. Construction sites are not included in the businesses directed to close. However, any continuing businesses are encouraged to comply with certain guidelines.

The Government has said construction sites can remain open where the safety of workers can be ensured during the social distancing measures it has imposed. It appears that most major construction firms have shut their sites; however, some are now beginning to reopen in a reduced capacity (see media report).

Vietnam

Status

Varies across the provinces

Details

There is currently a 15-day nationwide isolation, which commenced on midnight of 1 April 2020. However, according to the Government's instruction, infrastructure and construction projects are allowed to continue their operation under strict anti-epidemic measures and absolute safety ensured by heads of these establishments and supervision of local health authorities. Failing to comply with these requirements will lead to suspension. The Government has also assigned the Chairman of each provincial People’s Committee to decide on and publish lists of manufacturing, businesses establishments and construction projects in the respective locality that have to be temporarily suspended.

In practice, measures vary across the provinces. For example, all construction sites in Hanoi have been instructed by the Hanoi Department of Construction to be temporarily suspended from 1 April 2020 until 15 April 2020. Meanwhile, the Ho Chi Minh City Department of Construction has requested that, with non-specific or non-urgent projects, investors should extend schedule or suspend construction to restrict the number of large gatherings, and limit night shifts unless there is a special requirement. These restrictions are applicable for 15 days from midnight 1 April 2020 or until the issuance of new instructions from the Government or the Ho Chi Minh City People's Committee.