by   |    |  Estimated reading time: 5 minutes  |  in Engineering, Construction & Infrastructure   |  tagged , ,

There is no shortage of analysis on how the current global pandemic is changing construction safety regimens on job sites around the world. The economic impact on construction is also non-trivial. Between the coronavirus and the Saudi-Russia oil glut that has impacted oil and gas infrastructure and exploration and production projects, the Fails Management Institute (FMI) suggests that we won’t know the true impact on the construction industry until the third quarter of 2020. They suggest that like a hurricane forecast, construction executives rely on a “cone of uncertainty” to represent the risks we believe to be in the forecast, including varying levels of economic decline and speeds of recovery.

Contractors must be able to manage risk in terms of demand for their services, as well as risk inherent in each project they undertake. This requires accurate timely information, discipline and a mature approach to identifying, monetizing and mitigating risk beyond what many contractors are currently equipped for. But what smart construction executives should be thinking about right now is how construction must change going forward.

As we enter a post-pandemic era of construction, project teams designing and constructing the built environment will need to not just work differently but build differently and help project owners mitigate the risk of periodic disruptions from fire, flooding and yes, global pandemics.

construction contractors mitigate risk

Identifying and monetizing risk

Disruptive events will happen from time to time. This is not controversial or subject to much debate. What contractors and engineering companies need to determine though is how they can design, build and maintain assets around these risks. Will a five percent increase in construction cost make a structure more resistant to wildfires like those that recently devastated Australia and California? If so, how does that pay for itself over the life of the asset in terms of replacement and repair cost or insurance premiums?

Will rising waters caused by global warming put the project and asset at risk of flooding during its lifecycle? Government bodies including the U.S. Army Corps of Engineers and the UK Parliament  have been issuing risk management guidance regarding global warming for years. This makes sense because critical infrastructure in every country in the world will be affected, with some regions like the Mediterranean and countries like Croatia being particularly vulnerable.

How will site plans and designs change to accommodate the impacts of climate change including more extreme rainfall events and rising sea levels? Contractors must have the tools to help project and asset owners identify and plan around these risks.

Making strategic recommendations

The current COVID-19 pandemic will have far-reaching implications for construction, well beyond the work safety measures many are currently focusing on. Contractors should help project owners evaluate the desirability of things like the ASHRAE Position Document on Airborne and Infectious Diseases. It may prove cost-effective for many institutional environments to adopt some of the tactics used in a hospital environment, including:

  • Supplying clean air to susceptible occupants
  • Containing contaminated air and/or exhausting it to the outdoors
  • Diluting the air in a space with cleaner air from outdoors and/or by filtering the air
  • Cleaning the air within the room

Or are other building technologies, like ultraviolet air and surface treatment, more desirable for a given project? Contractors must be able to consult intelligently with their customers based on risks that are identified, monetized and amortized over the useful lifecycle of the asset they are building.

construction contractors mitigate risk

A lifecycle approach

By taking a more consultative approach with project owners, contractors and engineering firms open the door to reliable, high-margin revenue sources like facilities and maintenance contracting or even operations and maintenance contracts.

Some of these contracts can be best supported with a field service management approach, for instance, when a contractor is simply dispatching technicians for service calls or for break-fix repair. Field service management software can facilitate many types of aftermarket contracts, including those that include service level agreements, repair and replacement of project components and the use of subcontractors to perform aftermarket service work in the field.

For contracts that involve assuming some degree of risk in operating the asset, construction industry organizations will need some enterprise asset management software capabilities to help them identify and mitigate that risk along with the maintenance and operations software tools then enable them to profitably run an asset-intensive business. These advanced practitioners will need to engage in collaborative asset lifecycle management process with their project owner as they will share responsibility for the design, operate and maintain phases of the asset.

Harnessing the power of technology

Contractors are likely already rapidly adopting one disruptive technology that has eluded many of them—enterprise systems that truly support the mobile workforce. Many contractors and to a lesser extent engineers are running on a patchwork of systems that make remote work and collaboration challenging. Modern enterprise software provisioned in the cloud supports mobile devices in various formats and makes the entirety of the business accessible anywhere.

But the winners in recovery will be contractors. The ones that use any excess capacity they have now to re-invent their operations around technology-enabled services. The internet of things (IoT) sensors in a finished project can drive data and maintenance offerings over the asset lifecycle. Artificial intelligence (AI) will automate many construction business processes. They will offer customers digital twins of their assets and use those digital twins to support a collaborative asset lifecycle management (CALM) approach that drives long tail revenue.

construction contractors mitigate risk

Revenue that lasts

Many contractors have already built out maintenance and facilities management capabilities, and now, as project owners seek ways to navigate in an uncertain future and contractors seek long tail revenue, is the time for more contractors to move in this direction. Learn more, and see how your business stacks up to others in the industry, with this study on aftermarket service maturity among trade contractors.

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