What are the risks of building during COVID?

As COVID-19 shook the economy to its very core, the Australian construction industry (at first glance) seemed to fare better than most. Classed as an 'essential service', it managed to avoid the closures that hamstrung so many other sectors. However, it didn't avoid all the uncertainty and disruption; in fact, it is still feeling the aftershock now- not least in residential building and commercial construction.

This article explains the main risks associated with choosing to build your property in the midst of a pandemic we are still learning about and learning to live with, even now.

Delays and suspensions

'Uncertainty' is perhaps the feeling that has most characterised the pandemic, and this has been felt in the construction industry most keenly, with the inevitable delays and suspensions arising from a situation ever subject to change.

From unforeseen worker illnesses and absence, to supply chain issues, the disruptions have laid bare just how reliant the sector is on outsourcing and how much it is at the mercy of the complex global supply chains.

Knock-on effect from delays and suspensions

These delays and suspensions have consequences. Yes, for the timescales for the build, but also with any costs incurred when construction stalls, and even potentially with funding and financing restrictions.

Cash-flow issues with the contractors can also have their own negative implications.

Volatility of commodity price swings

This is the unforeseen variable that has hit home-buyers the worst- right in the pocket.

Shortages of labour and materials have seen price rises of 25-30% in the last year alone. And those rises aren't finished just yet. (link to the article on "are building costs going down")

Potential for contractual complications

Although delays are usually covered by 'force majeure'- unforeseen and out of the contractors control- again, it adds another complication, another unknown variable into the process.

The upshot is that building in the pandemic comes under a bit of cloud when it comes to confidence in timings and even cost. Not that it has deterred too many, as the rocketing demand has shown! Unfortunately, this has just served to make those problems even worse, perpetuating the vicious cycle of commodity shortages and rising prices. Thankfully we look to be over the very worst of those.

Our advice? The pandemic needn't put you off your project, but going into the process with your eyes open to these risks- and preparing where you can- can only stand you in good stead.