We are now in the 5th week of the Movement Control Order (MCO). Save for essential services, most of the Construction industry are in the shut-down mode for the past 5 weeks. Suffice to say, many in the construction supply chain are adversely affected.
As a matter of fact, even before the MCO was introduced on March 16, many suppliers are already facing disruption to their supply chain as China begins shutting down factories and lockdown in cities by the end of January – February 2020.
While we are now in the 5th week of MCO, China is now slowly opening its factories and ramping up production, it is difficult to forecast the impact. It might take weeks or even months for factories to fully clear up the backlog and to get back the manufacturing economy up to speed.
Locally, there is no doubt the MCO have adversely impacted the progress of most if not all construction works in our country. However, should we expect that when MCO is lifted on the 29th April 2020 everything will be back to normal? We all know the answer is a definite NO. Just like what happens in China, the same will apply here in Malaysia as well, albeit on a much smaller scale. No doubt the most impact will be felt by the labour-intensive companies. Foreign labourers that have gone back to their home country prior to the MCO will be left stranded due to lockdown in their home country (case in point Indonesia and India) and might not be able to come back in time even when the MCO is lifted on the 29th April 2020. Local contractors that rely heavily on these workers might be faced with manpower issue and not being able to commit manpower for their projects.
The MCO has also caused material and equipment delivery to project sites to be delayed. This is due to the. congestion at our major ports (Port Klang, Port of Penang, and Johor Port) because during the MCO period only essential goods can be cleared and ‘non-essential’ good are stuck at the ports. Further transportation of these ‘nonessential goods’ to warehouses are also affected during the MCO period.
Contractors impacted by the Covid-19 and MCO will be looking into their Contract Documents for Force Majeure clauses to protect them from the forced prolongation of the time required to complete the works and claim for Loss and Expenses to cover additional costs due to the disruption caused by the MCO. However, they need to be mindful that the effects of the MCO will be felt for weeks and months after the MCO is lifted. I believe that on top of the Extension of Time (EOT) analysis that contractors will need to do, Disruption Analysis too will be required in order to fully consider the delay in progressing the site works after the MCO is lifted.
I really believe that the Covid-19 pandemic will change the landscape of the construction industry. Building construction systems that require fewer manpower on-site such as modular system, Industrialized Building System (IBS) will gain prominence among the larger Contractors.
The MCO really forces us to have online face to face meetings via tools such as Zoom, Google Meet, Microsoft Teams. I have personally used all three applications and I can only vouch for their effectiveness as online meeting tools. The only feature that I would like all three to have is to be able to record minutes of meetings automatically.
The Covid-19 pandemic forces every one of us to look into Force Majeure clauses (not that it’s a bad thing) but more importantly, it forces parties entering into contract during this period to seriously consider their options to add-on supplement clauses in the contract to allow for disruption due to Covid-19 or future suspension of works by authority due to similar type of MCO or even on a smaller scale type of MCO.
The Covid-19 pandemic will also encourage further and deeper usage of biometric systems in the construction industry. Perhaps technology such as body thermal scanner will be used more and more in construction sites. Perhaps we could even see more profiling and facial recognition being used as well to determine the risk status of a worker or a group of workers in contracting communicable diseases. They call this ‘invasive technology’ and I somehow agree with the name. Perhaps Covid-19 will finally give much-needed impetus to our local authority to adopt centralized and better living quarters for our foreign workers working here in Malaysia.