Post Covid-19: Stimulus to the Construction Industry

By Riza Yehiya

The construction industry is one of the most affected by the Covid-19 pandemic. Though construction projects were visible in several parts of the city and its suburbs seemingly buoyant, it was suffering for sometimes. With Covid-19, it has come to the lowest ebb.  It was suffering from cashflow issues, shortage of skills, foreign contractors dominating major local projects employing expatriate workers, bureaucratic delays caused in project approvals, and absence of single window for approvals causing delays escalating costs etc.

The problems are more policy based than implementations. The macro environment is not conducive for the industry to thrive in spite of market demands for new constructions. Post conflict Sri Lankan society came out in a big way to rebuild their life from the three decades stagnation they experience due to conflict. This was short lived since macro-economic policies were not reconfigured to adjust to new realities instead industries were allowed to grow in an unregulated unsustainable manner.

The construction industry globally, has gone through major changes in terms of technology, management processes, construction and building regulations, construction waste management, sustainability & Climate Change response etc. Sri Lankan construction industry is yet to embrace these new requirements and adjust its statutes, regulations and process management to enable the industry to effectively and dynamically respond to national needs and buttress the economy. A failing construction industry would sap the economy whilst contributing to brew major socio-economic issues in society. Construction industry is the only supply chain which enables big money trickle down to small man cascading through various economic strata in society. A failing construction industry is a socio-economic and political threat to a nation indicative of negative development.

Turbulent socio-economic and political situations in the past ten years and lack of improvements in the macro environment protecting the industry has robbed investor confidence in respect to investment security and poor Return on Investment (RoI) caused by delays in approvals, deliveries and payments contributing to rising overheads. This is also exacerbated by influence of vested interest, corruption and politicization impeding project progress. These are endemic issue requiring urgent response at policy level to resurrect the industry.

Covid-19 Challenges

Covid-19 pandemic would impact the way we live, together with that our lifestyles, consumer behaviour and means of getting about life will be different from the past. Similarly, investment priorities and spending capacities too would change. Sense of vulnerability regarding socio-economic and consequential political instability would dry the desire to invest in constructions. The prevailing macro-environment would exacerbate this. Therefore, the state, especially the policy makers must intervene to stimulate industry to spring back and buttress the national economy.

 Stimulus Package

 The stimulus package need not be financial alone, instead policy reviews, regulatory changes, administrative decision-making processes, effective stakeholder response and creating way forward enabling the industry to become economically and environmentally sustainable would stimulate growth and secure the industry. This would help the industry to recover the losses incurred due to various factors and would create new opportunities to make profit without undermining the society, economy and the environment. In view of this, the following are suggested to help macro environmental change to revive the industry.

Project Approvals

Project approvals takes a long time which impede investment decisions and often lead to divestment. Currently, building project approvals by the Urban Development Authority (UDA) is two tiered. The first being the Preliminary Planning Clearance and then the Building Approval which require supporting clearances from the other project approving agencies. Slow process and lack of single window approach takes time between three months to more than a year. These are not helpful for investors. Amidst this time span, other socio-economic and political turbulences in the country prompts them to divest their investments.  Therefore, to address this, the following is suggested:

1. A Single Window approval process should be expedited. Until then the following Three (03) Tier Approval process is suggested.

    

    

    

    

   1. Tier 1: Preliminary Planning Clearances
   2. Tier 2: Building Plan approval in two (2) tiers:

       

       

       

       

      1. Conditional Preliminary Clearances from Project Approving agencies. This would help development feasibility of continuing with the investment and would give sufficient time to prepare compliance document to satisfy project approving agencies
      2. UDA to wet the building plans for compliance with Building regulations and issue an Interim conditional approval of Building Plan.
   3. Tier 3: Upon approval at the above three levels, the UDA to monitor periodically for compliance with the statutory conditions and help developer work towards obtaining the Certificate of Conformity (CoC). 

Residential Condominium

Residential condominium built in land extent between 500M² and 1000M² for Intermediate and Middle Rise Building to amend the following specification given in the City of Colombo Development Plan (Compiled Edition)

1. Plot Coverage is suggested to be reduced from 65% to 60%. This will help micro-climatic condition of the site, help better surface drainage and reduce urban flood. Help better access to building envelope, increase daylight and energy efficiency.
2. Increase the Floor Area Ratio (FAR) by 5% from the current specification. This will enable the developers optimise the land use and reduce the cost of a residential unit. This will increase the supply side and reduce demand thereby making selling price competitive and reachable by customers. This will protect the ROI of the investor.
3. Parking requirements for residential building, following changes are suggested:

4. Passenger Elevator: A minimum of One passenger elevator must be a hospital lift or eleven (11) passenger capacity should be made mandatory.
5. Roof of Intermediate and Middle Rise building in land extent between 500 and 1000M² should be made mandatorily a flat roof with green roof facilitating rainwater harvesting. Having green roof increases energy efficiency, adds green space for the occupants, reduces urban flood, helps rainwater harvesting and helps roof scaping or urban agriculture helping urban food security.

The foregoing suggestions would stimulate the industry by reviewing the relevant sections of the building regulations which are superfluous and out of sync with the real building requirements. Therefore, these suggested amendments would help the construction industry by optimizing land use and cost reduction of residential unit giving better market potential. This would help bring product price within the purchasing power of the customer and help better RoI without compromising quality & sustainability.

Considering the carparking requirements in the future, it should be noted that in the past Sri Lankan urban population sought to own private transport due security needs prevailing then. In the post war scene, this security need has reduced whilst alternative ‘on demand’ transport facilities like PickMe, Uber etc satisfies flexibly, cheaply without the overhead of owning a private car. Therefore, with the march towards online working and studies, home based offices and PickMe, Uber like transport availability and other state urban transport initiatives would reduce people owning private vehicles.  This will reduce the parking requirements in residential buildings in urban areas.

Having said this, the writer is of the conviction that making the suggested changes to the current regulations would stimulate the construction industry and help resuscitate the economy at a testing time like this.

(The writer is an Architect and Sustainability Consultant contactable @: rizayehiya@sustdesignstudio.com )