Impact of COVID-19 in Construction Industry and
Implications of OD:
An Organizational Development Perspective
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Abstract: With a growing emergence of the COVID-19 situations around the world,
the global economy has entered to a stagnant state leading to a situation of high
unemployment and fall in supply-demand creating greater unique business challenges
for organizations. With proper application and practices of OD (organizational
development) knowledge and practices, overwhelmed organizations may see the light
of the practical solutions to apply and successfully deal with these challenging
situations. The objective of this study is to investigate into this global hazard in search
for major COVID-19 impact on the construction industry and figure out creative
organization solutions in successfully tackling and finding way out of this continuously
evolving global crisis. In this endeavor we presented some of the major updated news
on the COVID-19 impact on this sector and proposed some unique business
recommendations at the end of the discussion.
Keywords: Construction Industry, COVID-19, Impact, Organizational Development.
1. Introduction
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Due to increased globalization, the ripple effect of the COVID-19 pandemic has
reverberated through every corner of the globe, causing loss of lives and jobs as well
as a slump in general economic activities. The domino effect of the virus has brought
untold pain and hardships to many individuals and organizations from all corners of
the world. Apart from the loss of over hundreds of thousands of lives, it has been
projected that this pandemic could cost the world $2.7 trillion, equivalent to the UK
economy.
Construction and engineering projects around the world are also massively being
impacted by the COVID-19 pandemic in numerous ways, and many projects have
stopped. At this stage, COVID-19 is not, broadly speaking, rendering projects
altogether impossible to complete. But it is slowing them down, causing delay and
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disruption, even if only because supply chains have been severally disrupted. Many
projects have even stopped, usually with the intention to resume work at a later date. A
number of governments have also ordered that certain businesses stop working.
However, the construction industry has generally not been the subject of ordered
shutdowns. the situation is evolving and several countries have now ordered the
suspension of all non-essential businesses, which would cover most construction
projects. In a few countries, there have even been specific orders requiring
construction sites to close, or entitling contractors to suspend works and to extensions
of time until the end of the state of emergency period
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In this tough time of surviving the global crisis of economic stagnation and
organizational ineffectiveness, the only way to light of the end of tunnel for the global
organizations is to seek for professional development consultancy for a process of
organization wide planned change in strategic planning which can successfully
interact with its open system environment and can gain what it wants. This is where
the idea and need for Organization Development & Change Management kicks in.
With the help of an OD (Organization Development) consultant, a company/ business
can identify the major areas of it that needs to be changed or modified so that it can
perform its best potential in a given situation and achieve the desired organizational
objectives. With the help of OD knowledge, the major businesses and companies in
construction industry can unwind itself from this overwhelming pandemic situations
and find optimal, realistic solution that can help to come up with practical solutions as
situation evolves and benefit in reducing cost and organizations efficiency. That is the
main goal of this paper is to show how to achieve that with the best OD practices. For
this purpose and for the sake of a simple and concise report, the discussion part of the
paper has been divided into two section. The first section portrays the current situation
of the industry, the impact of COVID-19 on it and the later thoroughly investigate the
process for an OD implication and how to best to do that.
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2. Research Questions
The research procedure aims at answering these four main research questions -
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a) What are the complications created by COVID-19 in the Construction
Industry?
b) Why the knowledge of OD is important?
c) How to come up with practical OD change plan (best OD practices) as the
situation evolves in order to rejuvenate already depleted organizational health
due to the pandemic crisis and make it invulnerable to external conditions and
fit again and what they?
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3. Literature Review
Although there is no authentic journal articles or books published yet regarding this
specific niche, we found some relevant literature that talks about the impact of
COVID-19 on construction industry and discusses the uses of OD in the crisis
situation.
3.1.
Connecting Covid-19 and Construction industry
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A report published in ‘GILBANE’ predicated upon some potential threats on
construction business. Joe Piro, vice president and director of supply chain
management at Gilbane, is spearheading information-gathering efforts around the
country. He argued, “Construction labor and productivity will be affected should
infections become more prevalent. The CDC has advised that a 14-day quarantine is
necessary for recovery and to prevent the spreading of the disease. As such,
construction delays due to diminished or temporarily ceased on-site operations are
possible and should be considered with respect to holistic facility delivery and
turnover. He also said that Domestic manufacturers of commodity-based products,
such as concrete, steel, gypsum and glass, were currently reporting no disruption to
lead times or prices. Major producers had increased inventory levels over the last few
weeks and had committed to reserving plant capacities for regular customers. New
customers will be considered only if additional capacity exists.
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The EIC (European International Contractors), a major community organization for
contractors and engineers recently published a report on their online media, “the
impacts of the virus on the global construction business might prove to be detrimental.
Contractors are at the forefront as they are service and product providers at the same
time. Covid-19 affects both material and labor, key cost components of construction
projects, and by doing so, challenge on-going project delivery, companies’ liquidity
and whole business models.” They argued about the various aspects of the challenges
in terms of construction industry.
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Joe Chan, Head of Cost and Commercial Management in China, reflects on its impact
on the real estate and construction industry in China and the outlook for the rest of the
year and beyond, through an interview where he answered questions about different
conditions and facets of the challenge. Meanwhile, Construction Plus, an Asian web
portal that presents extensive, in-depth B2B insights and updates from the construction
industry in Asia published an online material that argued, “Currently, about 50 per cent
of our projects have been impacted. The rest of our projects are still operational, but
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with slow progress to ensure the safety of our workers. The suspension has also been
estimated in our three scenarios, so the ongoing operations are still under control.” It
also said, “Business is going down by approximately 30 to 40 per cent. With workfrom-home (WFH) measures being implemented, work effectiveness has undoubtedly
declined.”
3.2.
Implications of OD in Covid 19
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EU Business School posted an article by Emma Giner, an organizational design expert,
titling, “How COVID-19 Will Impact Organizational Design” – where she told,
“COVID-19 is accelerating the pace of necessary changes needed to bring change in
the organization’s design around the world. University of Missouri System published a
guideline for the organizational leaders that talks and provides practical directions
about bringing and managing change in the workplace.
Another article ‘Organizational Resilience: leadership lessons from COVID-19’
viewed the recovery actions as not being equal to the resilience and stresses the
importance of building strong effective leadership, human resource and technology
and arm the organization with necessary defense against crisis situation. Our
assumption is that, by studying and implementing the theory and practices of OD; and
building an effective change environment in the organization, would be improving
these conditions.
4. Methodology
This research thrives to accomplish mainly these two objectives- (1) To the
complications created by COVID-19 in Construction Industry and (2) To come up with
practical OD change plans by reviewing the best theory and practices of OD, as the
situation evolves in order to rejuvenate already depleted organizational health and
make it invulnerable to external conditions and fit again.
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A qualitative design was chosen for this paper. Most of the data collected and their
analysis in this paper is descriptive in nature. For our research limitation resulting in
the inability to collect primary data, we used secondary data collected from various
sources. As far as data collection tools were concerned, the secondary has been
collected from different web articles, journals, books, and various published materials
regarding the pandemic impact and OD implications of it. In the discussion section, we
break it into two sections. In the first section, we described the current situation of the
industry, the impact of COVID-19 on it. In the later, we thoroughly investigated into
best the OD theory/practices for managing and dealing with the changes. Finally, we
concluded the discussion by providing some practical recommendation to successfully
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navigate the firm’s way out of the situation and guard their defenses against the hostile
environment.
5. Findings and Discussion
5.1.
Impact of Covid 19 on Construction Industry
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Current Situation of the Industry
Major Impacts of Covid 19 on the Industry
Impacts on the different construction business
5.2.
Recommendations of OD in survival of the Industry
Importance of OD Consultation in survival of the Industry (Rabbani)
Types Planned Interventions that can be undertook by the Organizations
Best Planned Change Model for Construction Business Organizations
Best Diagnostic Model (Individual, Group or Organization)
6. Implications & Results
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7. Limitation of the study
8. Further Research
9.
Conclusion
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10. References
https://www.whitecase.com/publications/alert/covid-19-current-impact-constructionengineering-projects
https://www.gilbaneco.com/wp-content/uploads/COVID-19-Impact-To-Construction-March2020-HQ.pdf
https://www.eic-federation.eu/covid-19-and-global-construction
https://www.arcadis.com/en/asia/our-perspectives/articles/the-impact-of-covid19-onconstruction-industry-in-china/
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https://www.euruni.edu/blog/covid-19-impact-organizational-design/
https://www.bestpracticeinstitute.org/blog/organizational-resilience-leadership-lessonsfrom-covid-19/
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https://www.umsystem.edu/ums/hr/managing-organizational-change-related-covid-19resources
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