Effect of COVID-19 on the small-scale construction companies: The case of Colombo district, Sri Lanka

Abstract

COVID-19 is a global pandemic that has wreaked havoc on the lives of many individuals and has had a severe impact on the global economy. During this crisis, small and medium-scale businesses suffer the most and are the least prepared among all companies as per the previous studies done in other parts of the world. The majority of the small-scale construction firms in Sri Lanka act as subcontractors and generate job opportunities for a considerable number of people and are able to create a multiplier effect on the whole economy. However, it was observed that they are more vulnerable to the adverse impact of the pandemic. Thus, the principal goal of this research is to explore possible survival strategies to overcome critical financial issues of small-scale construction companies during the ongoing COVID-19 pandemic in Sri Lanka. A mixedmethod approach was adopted to gather the data for the study. A comprehensive literature review was carried out to identify the impact of COVID-19 on both global and local construction industries. The data for this study was gathered using semi-structured interviews and a comprehensive questionnaire survey with small scale construction company owners and construction industry professionals. The findings highlighted the key financial issues faced by the small-scale construction companies due to the pandemic including delays in client payments, supply chain management issues, frequent price escalation of construction materials, and inability to repay loans. The respondents suggested creating partnerships with financially strong companies, reduction of unwanted expenses, modifying supply chain channels and agreements, and ensuring business continuity plans as the strategies to be used to overcome the financial burden that occurred due to the pandemic.