The full magnitude of disruption from COVID-19 is still unknown to many industries including the construction industry which, like many other industries, will continue to feel the effects for many years to come. Currently, as the Construction Executive reveals the top concerns for US accounting firms with dedicated construction practices were the shortage of skilled workers, increasing construction costs, reducing risk, and managing cash flow.
Workforce challenges are nothing new to the construction industry, we even discussed this in an earlier article shortly after the pandemic essentially halted the global economy. Acquiring and retaining skilled labor workers is essential to the survival of many construction companies and an issue the industry has fighting against long before COVID-19. However, now the question becomes ‘will skilled laborers return once the country re-opens, or will they use this as an opportunity to find employment somewhere else’? Workers that are receiving unemployment checks must weigh the decision whether to return. Additional unemployment benefits may make it harder to rehire workers since they may benefit more from unemployment than from their normal paycheck.
Additional costs due to the pandemic should be carefully itemized and contractors should not be wary of passing those costs along to clients. With additional money being spent on PPE for workers and the reality that the industry is China-dependent, construction firms are reassessing their contingency plans.
It’s important to note that rising costs are not just restricted to materials and labor. Things like the rising cost of insurance are no small increase. As security requirements expand amidst the virus outbreak, contractors will see an ever-increasing need for insurance to properly protect themselves. Additionally, increased training expenses are another unforeseen consequence of the virus. Small to large contractors are incurring unforeseen costs to provide COVID-19-related training to their labor forces, including information on how to interact with others using social distancing to stay safe on the jobsite. When the US exported manufacturing overseas, it also exported risk and pollution, something the nation may be unwilling to take back. For now, at least, increased pricing is here to stay.
With more office staff working remotely, companies need to keep their employees apprised and their devices protected from these malicious scams. Cybercriminals never miss an opportunity to come up with a new way to take advantage of current events, and COVID-19 is proving to be a lucrative one. Scammers have perfected ways to take advantage of the pandemic, all uniquely formulated to download malware on your devices. Businesses need to be cognizant of these threats and vulnerabilities to maintain appropriate IT controls to mitigate external attacks. Organizations also need to educate their employees to limit the susceptibility of the business for a potential data breach.
“First, ensure that security is part of the culture and DNA of your organization and that your end-users receive frequent training and reminders on how to apply scrutiny and due diligence in their daily computing habits,” states John Jamison, Technology Risk Services Partner-in-Charge. He adds “An annual security training program is not sufficient enough to keep these items fresh in the minds of your employees, instead, you may consider providing end-user training more frequently throughout the year in short, digestible formats. Implementing periodic testing of your ‘human layer’ is critical to ensure that the security training you are providing is getting through and being put into practice in your employees’ daily lives.
“Periodic phishing simulations or other social engineering examinations are a few methods that you can use to determine whether your end-users are properly applying the lessons they have learned. Finally, if upper management does not take security seriously, neither will the employees. Company leadership must embrace security initiatives and model appropriate behaviors for the team,” he advises.
Managing cash flow
According to the US Small Business Administration’s most recent report on the Paycheck Protection Program, the construction industry has received 12.38% of loans, ranking it third in approvals through June 30, and ensuring the survival of many businesses. Airtight contracts are key along with impeccable documentation and enforceable liens. Negotiating your contract thoroughly and adding interest penalties can help with getting paid as well. Nobody likes unexpected bills so communicating any change orders as soon as possible is key to prompt payments from clients. As the stock market took some serious hits in the early stages of the pandemic and then slowly recovered, employers looked at what they were contributing to their employee’s retirement packages.
It can be difficult to make sense of all the new legislation passed in the wake of COVID-19. Contact us to help you navigate through this pandemic and check out our COVID-19 Resources page for more information.