Heroes in a hard hat

Across Europe hundreds of building sites were forced to close due to the Covid-19 outbreak. but in contractors Poland have been able to avoid this, keeping many projects more or less on schedule. it’s no exaggeration to say that this has saved The entire Polish property investment market

General contractors in Poland certainly had more time to prepare for the situation than their counterparts in other countries, while the emergency regulations that came into force were less restrictive than in Western Europe. And they have been able to take full advantage of all of this.

Falling from the sky like a comet

What were the first reactions when it turned out that the coronavirus posed a real threat to our region? The general contractors Eurobuild has spoken to all gave the same answer: We need to think ahead.

“It seems we were ahead of the government. We already knew the situation was serious by the end of February, as some disturbing news started to emanate from other European countries. We sent out a directive to our employees to take precautions and quickly formulated safety measures to avoid infections. At that time no one had yet fallen ill in Poland, but we took the decision that all Warbud employees returning from abroad – and this was around the time of the school winter holidays – should stay at home for two weeks before returning to work. This is what we did on our own initiative. Later when they closed the schools, we followed the government’s instructions and those of Główny Inspectorat Sanitarny [the General Sanitation Inspectorate],” explains Monika Buraś, the member of the board of Warbud, responsible for the company’s response to Covid-19.

“We have almost 40 building sites across Poland and Covid-19 hasn’t stopped the work on any of them,” reveals Monika Buraś of Warbud

International construction companies were in a better situation as they could use their experience from other countries. At the beginning of March a coordination team was set up by Skanska Central Europe made up of senior managers and those who worked in sustainable development, HR, communidations and law. “At first, before the epidemic had come to Poland, the team met once a week online, then later it met everyday and later still – just once a week. The CEOs of all our different companies around the world had regular meetings,” says Kamil Simka, the general contractor vice-president of construction engineering at Skanska, who adds: “We also had an internal web portal to exchange information where we gathered together all the materials we needed to manage the situation with our projects and offices. These materials included posters instructions and recommendations. We also published all the news from the countries where Skanska operates and using this service were able to introduce best practices – for example we implemented a social distancing policy based on practices from the US and the UK and from the Czech Republic we had the idea of producing our own disinfectant.”

Kajima Poland was also forced by the new situation to communicate more often with Kajima Corporation as well as directly with its mother company Kajima Europe. “At the meetings we held every week online we analysed the new situation, we talked about safety procedures and shared ideas on how to protect ourselves from such threats as building material supply distuptions or our clients putting back making their orders,” explains Maciej Runkiewicz, the president of Kajima Poland.

The closer it came to the epidemic reaching Poland, the greater the activity – and not only in the offices but also on construction sites. “We began to speed up the building work to make sure that if we lost personnel or subcontractors, no delays would ensue or at least they would only be minimal. As far as the weather allowed we did as much of the work as we could within enclosed areas outside. We also stocked up on the most important building materials,” recalls Maciej Runkiewicz. “Supply disruptions to building materials posed a real threat and still do. After all, we are dependent on the continuous production and uninterrupted supply of prefabricated concrete, cladding panels, steel elements and also entire roofing, docking and installation systems. A break in supplies would cause delays to the construction work, but our clients had not agreed to any delays to the schedule. Of course you can always look for new sources of supply or new solutions, but normally this means adding to the costs of constructing the project,” points out Maciej Runkiewicz.

CFE Polska also faced supply problems. “We had a short break in material supplies from some of our suppliers, but we quickly secured these from other sources. Thankfully, there is no shortage of these on the market, so our stocks were never at any time in danger,” explains Przemysław Bożek, a project manager at CFE. “The most difficult situation we found ourselves in? I don’t think it was due to any technical issues, I’d say it was hardest for us at the beginning of the epidemic – the worst thing was the uncertainty. We are not epidemiologists, we are just builders; so it was difficult to weigh up the risks and make the decision to continue working. However, we put in place all the government’s safety measures and altered the way we work to further minimise the risks. I also think that because our workers followed all the new regulations, no situation ever arose on site that could have led to delays in us completing our contracts,” he adds.

Sites under special supervision

Everyone Eurobuild has spoken to stressed that their priority during the pandemic was and still is the safety of their workers. “The biggest change was the considerable limitations placed on access to our sites. The construction offices can only be entered by key personnel and all of them are obliged to follow safety procedures. Their temperatures are taken, there is the frequent use of disinfectant and other individual measures such as wearing gloves and masks. Meetings and consultations have taken place online and we held essential health and safety training sessions for groups outside,” explains the head of Kajima in Poland. “We also hired additional containers to recieve deliveries and had to organise our work in such a way that maintained a minimum distance between for those working on site. In a nutshell, our health & safety and HR departments have had their work cut out in drawing up our new procedures and ensuring that they are implemented. Taking such action not only protects our workers from the virus but also boosts morale and puts their safety concerns to bed,” claims Maciej Runkiewicz. Warbud ran an intensive information campaign for its line workers, involving posters in Polish, English, Ukrainian and Russian. Wherever possible pictures were used instead of words, with easily understood graphics setting out how to act, the types of precautions to be taken and also how to avoid infection.

“Taking such action not only protects our workers from the virus but also boosts morale and puts their safety concerns to bed,” argues Maciej Runkiewicz of Kajima

“For each of our projects we appointed a special coordinator to support the building managers and avoid any consequences from the pandemic. We have changed our working practices so that there was a greater rotation of workers and that each could maintain a safe distance. We provided our crews with masks and disinfectants and taken the temperatures of everyone coming to work. Wherever possible we have created a second entrance so that workers can maintain their distance from each other,” reveals Monika Buraś of Warbud.

Skanska has also made wide-ranging changes
to how it organises the work on site. Workers’ have been revised and their breaks are now held at different times so that they don't meet in large numbers, while the number of meetings, consultations and training sessions has been reduced to a minimum. The distance between the tables in social areas has been increased, and since April, where possible, canteens have been moved outside.

“As well as cleaning more frequently and taking standard safety and disinfection measures, we’ve ordered UV lights for all our projects to disinfect working areas. Project managers can also use ozone wherever the construction and organisation allows. It’s also proven to be a big advanatge to have a central distribution point directly on the construction site with everything necessary to prevent the spread of Covid-19 – including masks, gloves and disinfectant. When goods are ordered they come directly to the building site, which means you don’t have to go looking for specific managers off the site,” explains Kamil Simka.

All for the health of the employee

Making sure that you have a full team of workers has proven to be something of a headache since the beginning of the epidemic. This has not been not helped by the closure of the borders, which has prevented the entry of many workers from the east.

“At the beginning of the epidemic, the crew sizes wer reduced to 30 pct on some sites,” explains Przemysław Bożek. According to Warbud, during the worst point absenteeism was close to 25 pct. The company began contributing to fuel costs and parking fees for its manual labourers, in order to maintain staffing levels. Such measures were intended to encourage them to use their own vehicles to come to work, rather than by public transportation.

Skanska has also gone to some lengths to look after its employees. Each employee over 65 or who suffers from a chronic disease could stay at home on full pay. A recommendation was also introduced that every worker showing signs of infection (albeit just a slight cold) would be asked not to come to work. “Moreover, we implemented a policy that could be summed up as: worker dorms only for our employees. In other words only Skanska employees were to be allowed in the dormitory buildings. We didn’t want them to have to meet people from outside our company, which would have increased the risk of infection,” reveals Kamil Simka. Logistically this was easier said than done – it required workers to be moved between dormitories and Skanska had to stop using certain buildings.

“Some argued that we should halt all construction work, but in the end healthy common sense won out,” claims Kamil Simka of Skanska

Keeping your feet out of the puddles

The larger contractors don’t want to talk about the financial costs of the pandemic or about any liquidity problems caused by the lockdown. They say that if such problems occurred, they only affected smaller companies employed as subcontractors, but by working closely in partnerships such difficulties were overcome. The truth is that despite the difficult situation there was no sign on the market of any wave of construction firm bankruptcies or of them suddenly ripping up their contracts. “The most challenging moment was keeping control after the initial jitters, when the first cases of the disease were recorded in Poland. Some argued that we should halt all construction work, but in the end healthy common sense won out. By coming up with the right procedures we were able to continue with our work in safety,” claims Kamil Simka of Skanska. “We have almost 40 building sites across Poland and Covid-19 hasn’t stopped the work on any of them. Moreover, there hasn’t been a single confirmed case of the disease among our workers who have fallen ill. This shows how effective our policy has been and we are pleased about this most of all,” adds Monika Buraś. “We also intend to stick with many of the precautions we adopted during the epidemic into the future, including using face-masks, gloves and disinfectant, and we will also continue to house our workers in accommodation that is exclusively used by them and that these buildings provide them with the appropriate safety measures. We do not know if there will be a second wave of Covid-19, but if it does come, we have learnt our lessons and we will be prepared,” insists Kamil Simka.

Keep calm – it’s just a slowdown
Łukasz Michorowski - a partner and construction & real estate consultant at Deloitte

The Covid-19 epidemic has disrupted supplies of certain materials and equipment, particularly for goods produced in countries that introduced even more restrictive measures than Poland. According to data published by PZPB (Polski Związek Pracodawców Budownictwa), based on a survey of its member companies, delays only occurred sporadically and mainly affected goods imported from China and Italy. A large proportion of building materials is sourced locally and in the cases where there were disruptions to the supply of foreign imports, the delays did not cause any significant disruptions to completing the contracts.

A key issue for every company is maintaining financial liquidity. At the current stage of the epidemic no limitations have been introduced that would make it impossible to complete work on a construction project and this is very important for maintaining liquidity, since delays in completing a contract also compound the delays in an investor paying for a contract, which in some cases could topple the finances of a company. For certain, larger construction companies find themselves in a better situation as they have diversified order books and open credit lines, which when liquidity comes under pressure allows for greater flexibility in managing one’s own finances.

Smaller companies will be in a more difficult situation, since delays in paying for key projects can compound a loss of liquidity resulting from a lack of additional funds to cover their current running costs. As a result it is extremely important to continue working for medium and small-sized construction firms. Large-scale public sector projects are of key importance to our local construction market. They are the motor that drives the market in Poland. Currently companies are working on the contracts they were awarded in 2018 and 2019. Generally speaking they are projects with good margins as at that time companies had already started counting in rising material and labour costs, which had been going up throughout 2016 and 2017. Large construction firms were able to build up an order book, which will take up most of their capacity for 2020 and 2021. Large road and rail contracts that are part of the National Road Building Programme and the National Rail Programme are of particular importance. The expected economic slowdown caused by the coronavirus epidemic will have an adverse effect on every remaining segment of the economy and it is certain to cause a slowdown in many other segments of the construction market such as comercial and residential projects. Maintaining public investment and working on public projects will be hugely important for the entire market. In the current market situation many companies are going to find it an additional challenge to secure outside financing and guarantees. Banks and insurers are sure to raise their risk assessments for such clients and when such companies are unable to meet such requirements, it could severely limit the activities of both small and medium-sized companies in particular.