Three actions to mitigate construction risk due to extreme weather

The increasing effects of climate change have affected the construction industry, delaying 45% of construction projects worldwide.¹

In Asia, extreme weather effects exert a major economic concern for the construction industry. The region was the most disaster-hit due to climate change in 2023,² with more than 9 million people on the continent affected by floods and storms. More recently, Typhoon Gaemi had offshore construction projects at Fujian, China evacuated, and ships had to return to shore.³ Heavy rainfall, floods, and heat waves pose substantial challenges for construction companies, leading to significant delays and increased timelines.

Construction risk increases with climate change

With record heat waves set to become more frequent and prolonged, Asia’s construction industry needs to adapt to the risks with its reliance on labour and outdoor activities. According to an Air Force Institute of Technology report, for every 1ºC rise in temperature above 28ºC, construction worker productivity can decrease by as much as 57%.

The effect has already affected some companies in Singapore, where contractors faced a delay of up to two months as more workers called in sick due to soaring temperatures.⁴ Additionally, a study in Singapore found a positive correlation between the level of physical and mental exertion demanded by a job and productivity and economic losses resulting from heat stress. The loss of productive working time is projected to cause an economy-wide output loss of S$2.22 billion by 2035.⁵

Besides delays and productivity losses, construction companies also face climate exposure in their supply chains. Suppliers located in areas prone to climate-related hazards may experience physical damage to their facilities, transportation networks, or infrastructure. This impact is particularly pronounced in Asia, which serves as the starting or ending point for 49 of the world's 80 largest trade routes, with 22 routes passing through both ends, exacerbating the effects on construction projects.⁶

With climate change escalating the frequency and duration of extreme weather, never before has the need for climate-focused risk management strategies been more urgent.

Taking 3 actions to improve construction resilience against climate risk:

1. Physical risk modelling to be conducted throughout the construction life cycle

Understand the risks associated with the current climate and how it evolves under different climate scenarios throughout the life cycle of the project.
Provide comprehensive insights enabling proactive measures to anticipate and tackle peril-specific risks.

Aid in strategic planning by assessing the options for mitigation and transferring risks by offering a long-term view.

2. Risk engineering design review to help critical assets build resilience against extreme weather events

Review of drawings and technical specifications to ensure that the best aspects of climate risk mitigation are incorporated into the design.
Identify and discuss opportunities for improvements based on the results of the design review.
Conduct site visits during construction to ensure that installations are done in accordance with accepted drawings and specifications.

Together with risk modelling, risk engineering design review helps in securing the right insurance cover.

3. Supply chain risk identification to ensure a robust risk management plan

Identify and assess suppliers’ climate risk exposures, and resulting vulnerability to construction projects.
Conduct thorough risk assessments of your suppliers and identify companies located in high-risk areas.

Improve project resilience by identifying alternate sources.

Case Study: Building construction project resilience with physical climate risk studies

A property developer with diverse building operations across China wanted to study the impact of physical risk posed by climate change on their business and engaged Marsh Asia’s physical climate risk experts. Using reliable, cutting-edge models, Marsh evaluated the client’s risk exposures to extreme heat, water stress, windstorms, earthquakes, tsunamis, and extreme precipitation.

Through the findings, the client obtained:

A strong understanding of their portfolio risk hotspots to determine where to invest and develop, as well as what design standards are appropriate.
Visibility on asset-specific risks and implications, and clarity on related financial and operational impacts, which guides potential enhancement plans.
Support the building of climate-adjusted strategy, including future investments and asset enhancement plans for future climate physical resilience.

Make informed decisions based on comprehensive evaluations

With extreme weather becoming more frequent and prolonged, construction companies in Asia need access to vital information on climate risk exposures to make informed business decisions to increase resilience.

Marsh Asia’s climate risk experts utilise the latest cutting-edge models and data to provide comprehensive evaluations of climate-related risks on your construction projects, empowering you to implement effective risk mitigation strategies effectively.

^{1 Air Force Institute of Technology (2021), Weather-related Construction Delays in a Changing Climate: A Systematic State-of-the-art Review}

^{2 UN News (2024), WMO report: Asia hit hardest by climate change and extreme weather}

^{3 The Guardian (2024), Typhoon Gaemi: ‘race against time’ to contain massive oil spill in Philippines}

^{4 Channel News Asia (2023), Some contractors face delays of up to two months, as more workers fall sick due to warmer weather}

^{5 National University of Singapore (2024), Heat stress causes lower fertility, productivity and reduced cognitive capacity: Project HeatSafe}

^{6 Forbes (2024), In Asia’s New Era, Optimism Is Tempered By Political Change}