Navigating COVID-19: Preparing for the future of construction - cca-acc…€¦ · Validate your...

Navigating COVID-19:Preparing for the futureof construction

Welcome to CONnected

YOUR SPEAKERS

KYLE HULMEVP, Strategy & OperationsReal Estate & Construction

CHETAN SEHGALPartner, Advisory

Real Estate & Construction

JENNIFER LUCIERSenior Manager, Domestic Tax

Real Estate & Construction

COVID-19: IMPACT ON CONSTRUCTION

ü Impacting Every Segment of the Construction Industry

ü Significant Business Disruption à Project delays, supply chain

ü Changing Operational Protocols – Workforce Mgmt, H&S, etc.

ü Significant Cash-Flow & Financial Pressures

Circumstances are Changing Daily…

PRESENTATION OBJECTIVES

ü Review Elements of Strong BCP & Crisis Management Practices

ü Discuss How to Mitigate Impact As We Move Forward

ü Potential Cash-Flow Management Strategies

COVID-19 – PREPARING FOR THE FUTURE OF CONSTRUCTION

Crisis Management & Business ContinuityEFFECTIVE PRACTICES

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EFFECTIVERESPONSE

DEPLOY YOURCRISIS RESPONSE TEAM

CONDUCT A BUSINESSCONTINUITY RISK

ASSESSMENTPLAN FOR IMPACT ($)

4 CRITICAL ELEMENTSCRISIS MANAGEMENT & BUSINESS CONTINUITY PLANNING

COMMUNICATEEFFECTIVELY

Deploy Your Crisis Response Team

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DEPLOY YOUR CRISIS RESPONSE TEAM

GOALS:o Coordinated, timely & effective response to crisis situations

o Clearly defined roles & responsibilities throughout response

o Establishment of highly effective cross-functional “Crisis Teams”

ExecutiveTeam

TacticalLeads

ResponseTeams

Ongoing Communication

Operations Human Resources I.T. Legal Communications

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CHECKLIST ITEMS:

· Do you have Crisis Management guidelines and procedures to supporttimely and effective decision-making?

· Do you have response teams with defined roles & responsibilities?

· Do you have prepared crisis-communication messaging that can be readilydeployed moving forward?

· Have you created construction-site crisis response teams? If so, have youdefined their roles and 360* communication processes?

DEPLOY YOUR CRISIS RESPONSE TEAM

Business Continuity Risk Assessment

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BUSINESS CONTINUITY RISK ASSESSMENT

GOALS:

1. Identify potential internal business risks

2. Validate your mission critical functions

3. Validate your minimum services levels

4. Generate an action plan

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CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT

OPERATIONAL CONSIDERATIONS:

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HEALTH & SAFETYPROTOCOLS

OPERATIONALCONSIDERATIONS

PROJECT MANAGEMENTWORKFORCE &SUB-TRADE AVAILABILITY

SUPPLY CHAIN &THIRD-PARTY RISK

CONTRACT STIPULATIONS

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HEALTH & SAFETY CONSIDERATIONS:

u Have you updated your health & safety policies (ex. fit for duty policy)related to COVID-19 (while complying with legislation)?

o Address disease and hygiene protocols for experiencing symptoms on-site,staying home, and quarantine.

u Immediately implement government measures and best practices pertainingto hygiene on-site.

o Establish a on-site COVID-19 Task Force

u Communicate, Communicate, Communicate

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CONTRACT STIPULATIONS:

Take inventory ofyour contracts(suppliers &customers)

Review contractsObligations

•Notice and timing•Fine / Penalty

UnderstandContract T&C and

GovernmentalDirective

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CONTRACT STIPULATIONS:

Force Majeure - Act of God

Contract Frustration

Duty to Mitigate

Document – If not documented did not occur

Contracts in Negotiation – Learn and adapt

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FINANCIAL CONSIDERATIONS:

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RESTRUCTURING &FINANCIAL LIQUIDITY

PLAN FOR IMPACT($)

GOVERNMENT SUPPORTCASH-FLOW MANAGEMENT

SCENARIO ANALYSIS

INSURANCE CLAIMS

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COVID19 – GOVERNMENT SUPPORTCOVID-19 Fiscal Stimulus

CORPORATE AND PERSONAL INCOME TAX PAYMENTS

u Businesses and individuals can defer income tax payments includinginstalments until September 1st.

u This deferral applies to corporate and personal income tax that becameowing on or after March 18.

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u Eligible small employers can receive a temporary wage subsidy forthree months (between March 18, 2020 and June 20,2020.

u The subsidy will equal 75% of pay during that period, up to a maximumof $1,375 per employee and $25,000 per employer

WAGE SUBSIDY – SMALL BUSINESSESS

This program allows eligible employers to reduce the amount of payrolldeductions required to be remitted to the Canada Revenue Agency.

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u The program is available to both federally and provincially regulatedemployers.

u The Government of Canada has extended the maximum duration ofWork-sharing agreements to 76 weeks and waived the mandatorywaiting period.

u https://www.canada.ca/en/employment-social-development/services/work-sharing/guide-applicant.html

WORK-SHARING PROGRAM

This program is designed to help eligible employers avoid layoffs when there isa temporary reduction in the normal level of business activity that is beyondthe control of the employer.

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u The Business Credit Availability program will be managed by theBusiness Development Bank of Canada (BDC).

u https://www.bdc.ca/en/pages/special-support.aspx?special-initiative=covid19

u Working capital loans are available of up to $2 million.

u Postponement of payments for up to 6months, free of charge, forexisting BDC clients with a BDC loan commitment of $1 million or less

u Reduced rates on new eligible loans

BUSINESS CREDIT AVAILABILITY PROGRAM AND ADDITIONAL FINANCING

$10 billion in loans has beenallocated to this program

This is a new relief program effectiveMarch 18, 2020

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OTHER TAX CONSIDERATIONS:

u Capital Loss Planning

u Capital Dividend Account

u Estate Freeze

u Transfer Past Instalment Overpayments to HST or Payroll

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INSURANCE CLAIMS & COVERAGE

Review allinsurance policies

in detail

It is a contract,discuss withyour broker,

legal advisors

Policy Wording

They are alldifferent

Put your insurancecompany on notice

ASAP

Details toFollow

Document theimpact

Accuraterecords

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BusinessInterruption•Direct, Physical loss,

Damage

ContingentBusinessInterruption•Supply chain impact

(relying onsuppliers/customers)

Civil Authority•Government Order

InfectiousCommunic-able Disease•Specific Coverage –

Pandemicexclusion/limitaions?

Ingress/Egress•Limited Access

Builders Risk•Standard Insurance



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• Effort to Minimize LossesMitigation Activities

• Improvement Rather than RepairOperationalModifications

• Extra ExpensesTrack Costs

• Revenue or Operating CostsLosses

Communicate Effectively

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COMMUNICATE EFFECTIVELY

TOP PRIORITY FOR CRISIS COMMUNICATIONS

Messaging– Safety & Wellbeing of workforce is paramount- Early & often, clear, concise, fact-based- Tie to government related communications

EMPLOYEES

COLLABORATEà SEEK AND SHARE TIMELY INFORMATION

Messaging– Communicate: Your requirements, actions, and needs- Listen: To their impacts and how it may impact you- Determine cadence – when, how, who

THIRD-PARTIES

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QUESTION & ANSWER PERIOD

KYLE HULMEVP, Strategy & OperationsReal Estate & Construction

[email protected]

CHETAN SEHGALPartner, Advisory

Real Estate & [email protected]

JENNIFER LUCIERSenior Manager, Domestic Tax

Real Estate & [email protected]

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