{"id":451060,"date":"2022-02-09T06:50:33","date_gmt":"2022-02-09T06:50:33","guid":{"rendered":"https:\/\/www.constructionnews.co.uk\/?p=451060"},"modified":"2022-02-03T15:05:58","modified_gmt":"2022-02-03T15:05:58","slug":"how-to-survive-a-post-pandemic-zombie-attack","status":"publish","type":"post","link":"https:\/\/www.constructionnews.co.uk\/sections\/long-reads\/opinion\/how-to-survive-a-post-pandemic-zombie-attack-09-02-2022\/","title":{"rendered":"How to survive a post-pandemic zombie attack"},"content":{"rendered":"

Paul Cacchioli is a director at risk management and dispute-resolution consultancy HKA Global<\/em><\/p>\n

According to data from the Construction Products Association, construction output last year surpassed pre-pandemic levels. This positive outlook is underpinned by the expected growth in key sectors, such as housebuilding and infrastructure, as a result of the government\u2019s pledged \u00a3600bn programme of investment.<\/p>\n

“It is important that other companies are alert to the likely commercial traits and practices of zombies”<\/p><\/blockquote>\n

Less positive have been the difficulties faced in obtaining key materials throughout the pandemic, and a growing shortage of skilled labour, in part due to the exit of many EU-born workers from the UK market. There are also the ongoing implications of the pandemic to consider.<\/p>\n

The government support offered during the pandemic was welcome, but it fostered a danger that protective measures could only delay the inevitable in some cases. As a result, some businesses will have become \u2018zombies\u2019 \u2013 still trading, but unlikely ever to recover.<\/p>\n

It is important that other companies are alert to the likely commercial traits and practices of zombies, by monitoring their supply chain to protect themselves from impending failures.<\/p>\n

We are already seeing parties seeking guarantees, warranties, and bonds throughout their supply chains. We are also aware that a greater level of financial due diligence and scrutiny is being imposed throughout the market, to validate the financial wellbeing of suppliers.<\/p>\n

Even with protective measures in place, constant monitoring of your supply chain remains vital.<\/p>\n

Spotting the signs<\/h3>\n

Early visible signs of financial distress can manifest themselves in a number of ways; for example:<\/p>\n

    \n
  • A high turnover of staff<\/li>\n
  • A general decrease in labour on site<\/li>\n
  • A slowdown in the progress of the works<\/li>\n
  • Poor-quality workmanship or an increase in defects<\/li>\n
  • Removal of plant, equipment or materials from site<\/li>\n<\/ul>\n

    A company facing financial hardship may also take unusual action to improve its cashflow, which may in turn be a cause for concern. Signs may include:<\/p>\n

      \n
    • Requests for changes to agreed payment mechanisms<\/li>\n
    • Inflated payment applications or unsubstantiated claims<\/li>\n
    • Complaints from subcontractors regarding payment<\/li>\n
    • A lack of response to correspondence<\/li>\n
    • Late filing of statutory accounts and annual returns<\/li>\n<\/ul>\n

      If these kinds of warning signs begin to manifest, raising concerns about impending insolvency in a key member of your supply chain, it\u2019s important to act quickly to protect yourself.<\/p>\n

      How to respond<\/h3>\n

      There are some simple actions, and pitfalls to avoid, that can help safeguard your position. For example, without taking legal advice, don\u2019t:<\/p>\n

        \n
      • terminate, novate, or assign contracts<\/li>\n
      • appoint a new contractor to carry out work<\/li>\n
      • pay subcontractors directly<\/li>\n
      • make advance payments or pay for materials held off-site<\/li>\n<\/ul>\n

        Conversely, there are many pre-emptive steps you could take to prepare and ready yourself:<\/p>\n

          \n
        • Ensure you have a complete set of contract documents, including warranties and guarantees<\/li>\n
        • Establish a full list of your contractor\u2019s management team and their contact details<\/li>\n
        • Identify subcontractors critical to the timely completion of the works<\/li>\n
        • Clarify your rights and obligations in the event of an insolvency<\/li>\n
        • Schedule and, if possible, safeguard any plant, equipment and materials already paid for<\/li>\n
        • Instigate full monitoring of progress and determine the scope and value of work remaining \u2013 by marking up drawings, taking photos, and so on<\/li>\n
        • Prepare a contingency plan by identifying alternative suppliers<\/li>\n<\/ul>\n

          It remains unclear as to how the construction sector will respond to the challenges of the current climate, so it is imperative that firms remain vigilant. We may be entering a perfect storm, in which case it will be important to act, but not overreact.<\/p>\n","protected":false},"excerpt":{"rendered":"

          Paul Cacchioli is a director at risk management and dispute-resolution consultancy HKA Global According to data from the Construction Products Association, construction output last year surpassed pre-pandemic levels. This positive outlook is underpinned by the expected growth in key sectors, such as housebuilding and infrastructure, as a result of the government\u2019s pledged \u00a3600bn programme of …<\/p>\n","protected":false},"author":1,"featured_media":451061,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false},"categories":[57172,578,567,57171],"tags":[],"yoast_head":"\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\t\n\t\n\t\n