Improving construction industry resilience during & post-pandemic

Multiple sectors have faced unprecedented upheaval both as a direct result of COVID-19 and the mitigation measures that now seem like second nature: mask wearing, social distancing, sanitization. These challenges have been particularly acute in the construction industry, where remote or virtual work are very rarely viable options. Experts at a recent Swiss Re Corporate Solutions webinar highlighted the unique balance of risks within the sector, and shared insights on best practices that can support future-proof approaches to building and development.

Of the many business liabilities the construction industry faces, employee health and safety is a distinctive and key source of risk exposure. Research cited at the webinar suggests that construction workers are the most vulnerable among a group of high-risk professions that includes delivery workers, first responders and healthcare professionals.

“About 15 percent of construction workers whose data were included in the analysis showed positive COVID-19 results,” noted Arka Bhattacharya, Senior Risk Engineer, Swiss Re Corporate Solutions.

As it turns out, both the nature of the work and workers’ cramped living conditions are the main drivers of virus transmission. Construction typically requires workers to be on-site and in close proximity with one another, making social distancing requirements impractical and difficult to achieve.

Apart from that, many workers come from different parts of the world and are often deployed across sites, creating additional layers of difficulty in contact tracing, and identifying the sick or potentially sick. 

Apart from employee health & safety risks, pandemics such as the COVID-19 result in varying issues including project suspension and delays, cost escalation, supply chain issues, worker shortages, reduced production, and more. The initial response from the authorities and stakeholders was fluid and reactionary due to the unknowns and ever evolving nature of the pandemic.

Authorities such as the Building and Construction Authority of Singapore and Master Builders Association Malaysia have created resources which can be valuable benchmarks as construction companies seek to navigate and respond to pandemic-induced disruptions. To supplement these guidelines, the construction companies should develop their own playbooks to adequately manage risks.

The elements of these plans are also a key consideration for insurers when they perform risk assessments or in case of on-going project policy extension requests.

In insurance underwriting, a comprehensive risk assessment covers five fields that should be present in any well-formulated COVID-19 management plan: administration, prevention, detection, response and return to work.

Administration involves a review of the contractor’s COVID-19 management plan, which will be compared with the standards of the jurisdiction where work is being performed, to verify compliance with the existing guidelines at a minimum. The process helps insurers understand the safeguards that are currently in place, how they are being enforced, and how often they are refreshed in line with the latest health updates. The plan is also checked to ensure it addresses enforcement policies for vendors or sub-contractors.

The second step, prevention, looks at how contractors are implementing plans to prevent the spread of COVID-19 at their work sites. This step should include protocols for social distancing requirements, the use of personal protective equipment (PPE), visitor management, and the strength and viability of enforcement measures.

In addition to taking concrete steps to prevent the virus from spreading, contractors should develop the capability to detect any COVID-19 cases as early as possible. This protocol includes regular screening of everyone entering the work site to detect symptoms, as well as careful maintenance of daily records.

In the event a COVID-19 positive case is detected, contractors need to show that they are prepared to respond appropriately and decisively to limit the wider impact. Plans should set out adherence to any local government protocols for handling COVID-19 cases, and swift and effective contact tracing. More and more technology solutions are deployed to tackle the issue of monitoring and contact tracing.

The last, but frequently most neglected step, is how contractors manage the return of recovered workers to the job site. As construction workers are usually not eligible for paid time off, every day spent in quarantine or recovery represents more lost earnings, prompting many to return to the job site as soon as their condition improves.

However, this increases the risk of those who have not fully recovered spreading the virus to others, noted Bhattacharya. “There should be guidelines on when the affected employee can return to work, whether based on a physician's release, or other forms of written guidance.”

“A practical factor we consider when underwriting risk is contractor's compliance with local regulatory requirements to start with,” said Michelle Chung, Senior Casualty Underwriter, Swiss Re Corporate Solutions. “The other is how well contractors have set out internal guidelines, and more critically, ensured enforcement.”

Going beyond plans that allow construction businesses to operate and manage risks in the current crisis, there are several opportunities to take more proactive steps to build resiliency.

Induction programs or regular safety briefings can be conducted for on-site workers, to help them understand and better protect themselves from workplace risks. Technology can also be tapped to improve adherence to regulations. For example, drones can be deployed for remote work site monitoring, and on-site workers can be equipped with movement-tracking wearable devices. The devices alert them when they are not maintaining safe distances, and can be used for effective contact tracing should the need arise. 

Another strategy is to adopt new approaches in the design and construction of buildings. Modular fabrication, where building design and fabrication stages are completed at different locations with higher quality control, is an option that is useful in keeping the number of workers on a site at once down, and is gaining popularity, according to Bhattacharya. 

As Chung pointed out, however, insurers need to remain aware of the difference between variation orders – that is, agreements to change the scope of work in a construction project – connected to on-site COVID-19 protocols, and those that have long-term impacts on the design and built environment, such as “technology to reduce touch points, or design strategies to mitigate any airborne transmission of the virus.” 

"These could include the use of mechanical filtration or ultraviolet germicidal irradiation, or require the upsizing of heating, ventilation, and air conditioning (HVAC) equipment systems to remove bioaerosols from indoor air,” she explained. “In such situations, we would take a very cautious underwriting approach as they involve new methods, technology and measures which might not have any proven efficacy."

Diversification is another important strategy in building adaptive capacity. Companies should look to rebalance their supply chains to prioritize resilience over efficiency, by identifying alternative suppliers and building up inventories. At the same time, businesses can explore opportunities to diversify their portfolios when bidding for new projects.

“Companies with a diversified portfolio, a resilient supply chain, which focuses on skilling up their manpower, that invest in technology or digitization and innovation of building systems will be well-placed to seize new opportunities in the upcoming days,” noted Bhattacharya.