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Managing the impact of COVID-19 on the construction industry and major projects

Force Majeure & COVID-19 impacts on major projects

Owners and investors should expect an increase of Force Majeure claims as contractors face the impacts from stalled construction projects.

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Augusto R. Patmore

Partner, Advisory Global Infrastructure Advisory & Mining

KPMG in Canada

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The COVID-19 pandemic has had a significant impact on the Canadian and global economy, and is poised to continue to disrupt our usual way of life for the near future. The construction industry is no different, and while many projects have been deemed essential and permitted to continue, the new ways of working in the face of COVID-19 will have deep ramifications on productivity, schedule and overall costs of projects. With an annual contribution of over $142B to Canadian GDP (8.6% of total)1, and 100 projects over $300M2 currently in-flight, the impacts of the pandemic on the construction industry will continue to be felt for the foreseeable future.

Construction projects sit at the intersection of 4 primary value chains: Trades and skilled labour, material supply, design and engineering, and financing. Interruptions in any one of these value chains can have significant impacts on project outcomes, and as such disruptions across all four, as we are seeing now, present a serious threat to the industry as a whole.

1 Canada Real GDP by Industry: Construction, YCharts
2 Top 100 Projects for 2019, Top 100 Projects

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