Welcome to CONnected Navigating COVID-19: Preparing for the future of construction
YOUR SPEAKERS KYLE HULME CHETAN SEHGAL JENNIFER LUCIER VP, Strategy & Operations Partner, Advisory Senior Manager, Domestic Tax Real Estate & Construction Real Estate & Construction 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 COVID-19 – PREPARING FOR THE FUTURE OF CONSTRUCTION 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
EFFECTIVE PRACTICES Crisis Management & Business Continuity
4 CRITICAL ELEMENTS CRISIS MANAGEMENT & BUSINESS CONTINUITY PLANNING DEPLOY YOUR COMMUNICATE CRISIS RESPONSE TEAM EFFECTIVELY EFFECTIVE RESPONSE CONDUCT A BUSINESS CONTINUITY RISK PLAN FOR IMPACT ($) ASSESSMENT 6
Deploy Your Crisis Response Team
DEPLOY YOUR CRISIS RESPONSE TEAM GOALS: Coordinat ed, timely & effective response to crisis sit uations o Clearly defined roles & responsibilities throughout response o Establishment of highly effective cross-functional “ Crisis Teams” o Executive Tactical Response Team Leads Teams Ongoing Communication Operations Human Resources I.T. Legal Communications 8
DEPLOY YOUR CRISIS RESPONSE TEAM CHECKLIST ITEMS: Do you have Crisis Management guidelines and procedures to support · timely and effective decision-making? Do you have response teams with defined roles & responsibilities? · Do you have prepared crisis-communication messaging that can be readily · deployed moving forward? Have you created construction-site crisis response teams? If so, have you · defined their roles and 360* communication processes? 9
Business Continuity Risk Assessment
BUSINESS CONTINUITY RISK ASSESSMENT GOALS: 1. Identify pot ential internal business risks 2. Validate your mission critical functions 3. Validate your minimum services levels 4. Generate an action plan 11
CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT OPERATIONAL CONSIDERA TIONS: 12
CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT WORKFORCE & PROJECT MANAGEMENT SUB-TRADE AVAILABILITY SUPPLY CHAIN & OPERATIONAL CONSIDERATIONS HEALTH & SAFETY THIRD-PARTY RISK PROTOCOLS CONTRACT STIPULATIONS 13
CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT HEALTH & SAFETY CONSIDERA TIONS: u Have you updated your health & safety policies (ex. fit for duty policy) related to COVID-19 (while complying with legislation)? Address disease and hygiene protocols for experiencing symptoms on-site, o staying home, and quarantine. u Immediately implement government measures and best practices pertaining to hygiene on-site. Establish a on-site COVID-19 Task Force o u Communicate, Communicate, Communicate 14
CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT CONTRACT STIPULATIONS: Take inventory of Understand Obligations your contracts Contract T&C and Review contracts • Notice and timing (suppliers & Governmental • Fine / Penalty customers) Directive 15
CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT CONTRACT STIPULATIONS: Force Maj eure - Act of God Contract Frustration Duty to Mitigate Document – If not documented did not occur Contracts in Negotiation – Learn and adapt 16
CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT FINANCIAL CONSIDERA TIONS : 17
CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT CASH-FLOW MANAGEMENT GOVERNMENT SUPPORT SCENARIO ANALYSIS PLAN FOR IMPACT ($) RESTRUCTURING & FINANCIAL LIQUIDITY INSURANCE CLAIMS 18
COVID19 – GOVERNMENT SUPPORT COVID-19 Fiscal Stimulus CORPORATE AND PERSONAL INCOME TAX PAYMENTS u Businesses and individuals can defer income tax payments including instalments until S eptember 1st. u This deferral applies to corporate and personal income tax that became owing on or after March 18. 19
COVID19 – GOVERNMENT SUPPORT COVID-19 Fiscal Stimulus WAGE SUBSIDY – SMALL BUSINESSESS This program allows eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency. u Eligible small employers can receive a temporary wage subsidy for three months (between March 18, 2020 and June 20,2020. u The subsidy will equal 75% of pay during that period, up to a maximum of $1,375 per employee and $25,000 per employer 20
COVID19 – GOVERNMENT SUPPORT COVID-19 Fiscal Stimulus WORK-SHARING PROGRAM This program is designed to help eligible employers avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. u The program is available to both federally and provincially regulated employers. u The Government of Canada has extended the maximum duration of Work-sharing agreements to 76 weeks and waived the mandatory waiting period. u https:/ / www.canada.ca/ en/ employment-social- development/ services/ work-sharing/ guide-applicant.html 21
COVID19 – GOVERNMENT SUPPORT COVID-19 Fiscal Stimulus BUSINESS CREDIT AVAILABILITY PROGRAM AND ADDITIONAL FINANCING $10 billion in loans has been This is a new relief program effective allocated to this program March 18, 2020 u The Business Credit Availability program will be managed by the Business 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, for existing BDC clients with a BDC loan commitment of $1 million or less u Reduced rates on new eligible loans 22
COVID19 – GOVERNMENT SUPPORT COVID-19 Fiscal Stimulus OTHER TAX CONSIDERATIONS: u Capital Loss Planning u Capital Dividend Account u Estate Freeze u Transfer Past Instalment Overpayments to HS T or Payroll 23
CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT INSURANCE CLAIMS & COVERAGE Review all Put your insurance Document the insurance policies Policy Wording company on notice impact in detail AS AP It is a contract, discuss with They are all Details to Accurate your broker, different Follow records legal advisors 24
CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT INSURANCE CLAIMS & COVERAGE Contingent Infectious Business Business Communic- Civil Authority Ingress/ Egress Builders Risk Interruption Interruption able Disease • Government Order • Limited Access • S t andard Insurance • Direct , Physical loss, • S upply chain impact • S pecific Coverage – Damage (relying on Pandemic suppliers/ cust omers) exclusion/ limit aions? 25
CONDUCT A BUSINESS CONTINUITY RISK ASSESSMENT INSURANCE CLAIMS & COVERAGE Mitigation Activities • Effort to Minimize Losses Operational • Improvement Rather than Repair Modifications Track Costs • Ext ra Expenses Losses • Revenue or Operating Costs 26
Communicate Effectively
COMMUNICA TE EFFECTIVELY TOP PRIORITY FOR CRISIS COMMUNICATIONS Messaging –S afety & Wellbeing of workforce is paramount EMPLOYEES - Early & often, clear, concise, fact-based - Tie to government related communications TE à SEEK AND SHARE TIMELY INFORMATION COLLABORA Messaging –Communicate: Y our requirements, actions, and needs - Listen: To their impacts and how it may impact you THIRD-PARTIES - Determine cadence – when, how, who 28
QUESTION & ANSWER PERIOD KYLE HULME CHETAN SEHGAL JENNIFER LUCIER VP, Strategy & Operations Partner, Advisory Senior Manager, Domestic Tax Real Estate & Construction Real Estate & Construction Real Estate & Construction kyhulme@bdo.ca csehgal@bdo.ca jlucier@bdo.ca 29
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