COVID-19 Industry Impact Newsletter – 31st of March

Over the past few weeks we have been talking at EstimateOne about how we can support our industry while it grapples with the challenge of COVID-19. 

In the interest of sharing information to help everyone make better decisions, here are some observations made from our own platform. With more than 400 active head contractors and more than 40,000 active subbies and suppliers using EstimateOne, we believe we are well placed to provide analysis to support the industry as we all try to understand what’s happening right now, and what we should do next.

What we’re seeing: 

Chart 1: New tender volumes

Commentary:

  • We compared the new tenders added to our notice board by builders from before the crisis to after. We treat March 1st as the ‘beginning’ of the crisis (the 29th of February marked the first significant policy response from the Federal government with the implementation of compulsory self-isolation for returnees from several other countries).
  • For the first three weeks volumes tracked ‘BAU’. Last week was the first week we’ve seen a slow down in tenders with 218 tenders compared to an average of 260 in the week previous. Typically the middle of the week is busiest for new tenders, with between 40-60 added to the noticeboard each day; on Wednesday and Thursday this week we had only 22 and 27 respectively (though this picked up on Friday).

Chart 2: Awarded tenders

Commentary

  • The number of projects awarded by week is often a ‘noisy’ number for us (it depends, amongst other things, on builders reporting their awards on the platform), but the reduction over the past two weeks supports what we’ve been hearing from our builders – that clients are deferring their award decisions where possible. 

Chart 3: Subcontractor delinquency

Commentary: 

  • Cash flow for all parties in the industry is a concern through this period. One indicator we track is the decline rate for credit card transactions (for our noticeboard subscriptions). This rate has increased only slightly from its usual 5% to 5.6% over the past week.

What we’re hearing:

  • As of the weekend there is still an intention to keep sites running for active projects. Construction sites are deemed ‘necessary activity’ under the national guidelines, and we haven’t heard (yet) of site shutdowns.
  • Tendering is still active and volumes have been ‘normal’ throughout most of March (this corresponds with data shown above).
  • Builders are adapting to social distancing rules quickly where this is possible: many have implemented blanket working-from home policies or are working with rotating in-office shifts (dividing the business into teams who rotate in and out of the office). On-site options are more challenging, but builders are implementing new practices for hygiene and distancing on site, creating more space for amenities. Staggered working hours are being considered on some sites.
  • Early impacts of COVID-19 are being seen in Head Contractor awards: clients are deferring award decisions in the face of uncertainty in their own businesses and the economic environment (this is reflected in our data). 
  • Business Development activity has slowed right down, a combination of remote work plus a desire to defer decisions whilst the outlook remains uncertain.
  • Departments of Health are paying additional funds to accelerate progress on live jobs, in particular those which yield additional ICU beds.

Our view of what’s coming

  • It’s likely further lockdown restrictions will be put in place, especially if States decide to move on their own. Stage-3 restrictions in Victoria (as an example), adopted after the National Cabinet announcement on Sunday, still permit construction activity to continue, but Premier Andrews has signalled a willingness to move ahead of National guidelines.
  • Rules for sites will become more, not less, restrictive in the near term. NZ-style restrictions are likely, where “essential” construction activity is that which is related to the building of essential services and/or human health.
  • New fit-out tenders are likely to see a material drop-off as clients defer decisions on new office moves/refurbishments whilst their staff work remotely.

There will be concerted efforts to develop test kits for rapid detections of antibodies, allowing people who have developed an immunity to the virus back on site. UK researchers should announce material progress this week. Link

We’re intending to continue this newsletter as we have updated data. We don’t anticipate sending it more than once per week. If this is not helpful for you, you can unsubscribe by using the unsubscribe button below.

This is a difficult time for everyone. We all have a part to play in supporting each other and our industry through this challenge. 

Our commitment is to continue to provide insights and observations as we see them over the coming months, in the hope that they may help you make the best decisions for your business. If you have questions you think we can help you answer – we’re here to help.  

Our thoughts are with you, your organisations and your families. 

Cheers,

Mike

Michael Ashcroft

Founder, EstimateOne