With 2021 on the horizon, the construction industry is moving forward with the pandemic in mind and, unfortunately, the same obstacles remain. A lack of in-person meetings is impeding some companies' ability to conduct business, and there are rising concerns over the coming year's cash flow. Yet, the show must go on, so construction professionals are exploring new avenues that hopefully bring them to the desired destination.
No project can be completed without building relationships outside the company because there are simply too many parties involved. Owners, general contractors, subcontractors, material suppliers and more are the gears that keep a project in motion when working together. This is evident to Peggy Marker, president of Fort Lauderdale, Florida-based Marker Construction, who told Construction Dive that developing and maintaining her client relationships is a "long-term focus" in the age of COVID-19.
"My biggest concern is finding a way to generate and develop relationships from afar," said Marker, who is back to meeting with clients in person, albeit, with new safety measures in place. "No matter how many phone conversations or Zoom meetings you have, it's hard to seal a deal without actually meeting the person and really getting a sense of who they are."
The same issue extends to construction credit professionals and material suppliers who also want to know who they're getting into business with prior to moving forward with a business relationship, said Chris Ring, of NACM's Secured Transaction Services. Face-to-face meetings are risky by definition during a pandemic, he said, so those who can find creative and effective ways to maintain relationships and solicit new business in a virtual environment will keep their employees safe.
Although she is unlikely to abandon all virtual gatherings, Marker said she's implementing new solutions for safer office meetings, such as opening office and conference room doors during meetings to improve ventilation as well as leaving the generic office setting behind for outdoor locations. Adopting these changes has proven beneficial, Marker told Construction Dive, as her company has brought on three new jobs in the midst of COVID-19.
"That's been a big relief, because you just don't know what's going to happen right now," she said in the article.
Cash Flow Concerns
Not all businesses have suffered at the expense of COVID-19. In fact, businesses like subcontractor Gaylord Electric have experienced increased revenue— approximately $18 million (7%) in 2020 over the prior year, according to CEO Chuck Goodrich in a Construction Dive report. However, Goodrich said, 2021 may yield less-promising results.
"The definition of construction is that cash is king," Goodrich said in the article. "And right now, cash flow doesn't look that great in 2021. … We're optimistic, but overall, we're seeing a shortage of opportunities in September and October, with November and December usually being slower anyway."
Data from the American Institute of Architects fuels Goodrich's cause for concern, citing that nonresidential construction is due to retract in 2021. Gaylord Electric specializes in primarily nonresidential electrical subcontract work, Ring added, therefore, those who supply materials on job accounts for primarily nonresidential construction may face revenue shortfalls in 2021.
Cutting costs is certainly not the silver bullet his company can rely upon in the long-term, Goodrich noted, but it may alleviate some pressure until a more permanent solution is found. The CEO told Construction Dive that he is constantly communicating with his investors, bankers and customers to "make sure they know where he is, so that if he needs to tap their support, he can, especially if cash flow goes negative in early 2021."
"We have a great relationship with our bank, and we haven't had to use our line of credit very often," Goodrich said in the article. "But we've been communicating with them to let them know what we're doing, and what our strategic plan is."
The path to successful business may be altered as the pandemic continues, but construction professionals are adamant that they won't be throwing in the towel any time soon.
—Andrew Michaels, editorial associate