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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CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT
HEALTH & SAFETYPROTOCOLS
OPERATIONALCONSIDERATIONS
PROJECT MANAGEMENTWORKFORCE &SUB-TRADE AVAILABILITY
SUPPLY CHAIN &THIRD-PARTY RISK
CONTRACT STIPULATIONS
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CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT
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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CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT
CONTRACT STIPULATIONS:
Take inventory ofyour contracts(suppliers &customers)
Review contractsObligations
•Notice and timing•Fine / Penalty
UnderstandContract T&C and
GovernmentalDirective
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CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT
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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CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT
FINANCIAL CONSIDERATIONS:
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CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT
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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COVID19 – GOVERNMENT SUPPORTCOVID-19 Fiscal Stimulus
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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COVID19 – GOVERNMENT SUPPORTCOVID-19 Fiscal Stimulus
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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COVID19 – GOVERNMENT SUPPORTCOVID-19 Fiscal Stimulus
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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COVID19 – GOVERNMENT SUPPORTCOVID-19 Fiscal Stimulus
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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CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT
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
CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT
INSURANCE CLAIMS & COVERAGE
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CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT
INSURANCE CLAIMS & COVERAGE
• 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
CHETAN SEHGALPartner, Advisory
Real Estate & [email protected]
JENNIFER LUCIERSenior Manager, Domestic Tax
Real Estate & [email protected]
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