Infrastructure projects: Responding to the impact of the COVID-19 global crisis

5 actions to mitigate risks amid COVID-19

As the international response towards the COVID-19 pandemic continues to develop, we know that capital projects, infrastructure owners and stakeholders are faced with potentially significant challenges to which they need to respond rapidly.

The interconnectedness, complexity and global nature of the construction industry’s supply chains and workforce affect the cost and schedule of infrastructure projects. Any slowdown across infrastructure investments due to, for example, uncertainty of demand or access to financing could have an impact on project start dates or stall construction progress, with potential longer-term economic repercussions for host countries.

More broadly, projects at different stages should be reassessed:

  • Projects under procurement should be stress tested for the changes in economic and social environment. Procurement agencies/government departments may also consider if projects should be delayed, if spending commitments should be reprioritised, or whether projects can be delivered considering social distancing and supply chain challenges.
  • Projects under construction should be reassessed for construction delays, supply chain failure, contractual remedies available to ease the effect of delay, funding needs due to cost overruns and forecast revenue projections under different scenarios.
  • Assets in operations should also be stress tested on revenues, costs, cash collections, contractual remedies and long term market fundamentals to understand how this crisis will affect their liquidity position, funding needs and ongoing asset viability.

We work closely with organisations globally, including companies, governments, regulators, NGOs and international organisations, to help them prepare and respond to some of the most high profile outbreaks (including Ebola, MERS, SARS and bird flu). Here’s an overview of the most common issues organisations encountered, followed by five practical actions to help you mitigate risks and shape your COVID-19 response strategy.

Five key steps to mitigate the impact of COVID-19

Refresh business continuity & crisis management plans

The COVID-19 pandemic has put existing crisis management and business continuity plans under pressure. Having a deep understanding of the situation will allow you to effectively plan for, and respond to, the impact it has on your local and international market operations, supply chains, cash flow and workforce continuity. Ensure that you document the decisions made and actions implemented to allow for later assessment of best practice and assist with possible future legal actions.

Optimise people and organisation management

Review plans to keep your people and your working environment safe. Revisit your travel rules, HR policies, first aid plans and create safe ways to exercise the arrangements. Remember to also ramp up the working environment with up-to-date hygiene advice, visitor policies and consider partial/total building closure protocols if social distancing is required.

Ensure agile, aligned and effective communication as well as stakeholder management

Clear and concise communication is crucial as you anticipate and react to external events or crisis situations which may affect your business. Given the uncertainty about the real impact of the outbreak, organisations need to give confidence to their people and external stakeholders as you bolster your preparation and response measures.

Review your digital transformation strategy

Run your digital capabilities at full throttle to secure the wellbeing of your people, optimise operations, ensure security and continue to build trust. This crisis will test your digital transformation strategy. Leverage this situation to identify gaps that need to be plugged to strengthen your digital readiness across all three aspects of “technology” “processes” and “people”.

Be open to collaborations with government agencies in managing crisis

Compliance with all government directives for the wellbeing of the society is a must. Tough times like this are drivers of change and we must work together to create value for the society and economy at large. Let’s do our part in creating public bodies of the future that are adaptive to circumstances and ready to deliver its defined purpose in the face of a world that is  constantly changing.

What your COVID-19 response and resilience-building strategy need to include

  1. Strategic and tactical action plans that cut across the short, medium and long term. This will form the basis of your organisation's approach to maintaining communications and guiding principles for decision making
  2. A globally connected Project Management Office (PMO) to assist you every step of the way in your implementation
  3. A business model that consolidates both financial and operational information across your business divisions to assist you in your scenario planning
  4. A customised management dashboard that utilises data visualisation to focus on strategic KPIs and metrics. This can help provide management with insight into your organisation's performance and risk areas
  5. A robust performance and risk framework with adequate fine-tuning and stress-testing to drive your overall COVID-19 response and resilience-building strategy

Key considerations for critical contingency planning

There are eight key areas where infrastructure project owners must consider when charting your critical contingency plans.

  • Demand risk, cash flow and liquidity analysis
  • Financing availability & counterparty risks
  • Workforce disruption
  • Supply chain disruption
  • Construction delay
  • Opportunistic acquisitions
  • Government stabilisation and stimulus planning
  • Contract review and renegotiation

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