Ukraine Will Need Help Rebuilding!

 Ukraine deserves better than promises…they are going to need “REAL” infrastructure help…Wenston DeSue

Destruction to Ukraine's infrastructure estimated at $63B.

Dive Brief:

• The cost of direct damage to Ukraine's infrastructure in the month since Russia invaded the country has reached $63 billion, according to an analysis from the Kyiv School of Economics. 
• Between the start of the invasion on Feb. 24 through March 24, at least 4,431 residential buildings, 92 factories and warehouses, 378 schools, 138 healthcare institutions, 12 airports and seven thermal power and hydroelectric power plants have been damaged, destroyed or seized, according to KSE.
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• The KSE team created a resource for Ukrainian citizens to submit data on war damage to buildings, businesses, roads and other facilities. The Ukrainian government plans to use this data as evidence in international courts to compel Russia to compensate it for the destruction, according to KSE.

Dive Insight:

Beyond the human toll of 1,100 civilian deaths and a quarter of its population displaced, according to UN estimates, the hit to Ukraine's economy is also massive. 

In order to calculate the cost of the country's damaged infrastructure, KSE researchers analyzed several thousand notifications from civilians, the Ministry of Infrastructure and local authorities. They also used indirect methods such as calculating the estimated area of war-damaged property in the most affected cities.

So far the categories with the most expensive damage are from roads and housing destruction.

The conflict has driven Ukraine's construction industry to a near halt. "We expect this will have a massive negative effect on the entire construction industry," Morgan Williams, president of the 200-member U.S.-Ukraine Business Council in Washington, D.C told Construction Dive. "The mood is very depressing. Everyone is working from home or remotely."

The destruction of the country's major infrastructure has continued into April. Ukrainian officials said on Sunday Russian forces had destroyed the country's only fully functioning oil refinery and hit other "critical infrastructure," also likely oil-related, according to Reuters.

Global consequences

Europe's construction industry has also been impacted by the conflict, and contractors will likely find it increasingly difficult to source building supplies from Russia and Ukraine, according to Archinect. Growing European sanctions against Russia have exacerbated supply chain snarls, restricting the availability of materials like copper, iron ore and steel across the continent.

Ukraine produces building materials like steel, timber, pallets and clay for ceramic tiles, and these will be difficult to obtain since so much of its industrial capacity has been destroyed. Half of Ukrainian businesses have shut downcompletely, while the remaining ones are operating well below capacity, the United Nations Development Programme reported.

Shipping, too, has been affected by the conflict, according to the U.K.-based Construction Leadership Council, as many countries ban ships from Russia and port congestion grows due to more stringent customs checks. Experts also expect the uncertain supply of Russian oil and gas to lead to higher transport costs. Plus, Ukrainian and Russian nationals account for 15% of the global shipping workforce, per CLC, and there could be a severe workforce shortage as Ukrainians return home to fight.

Together, all these factors will likely raise the price of construction materials for contractors across the European continent, and lead to less predictable supplies. 

In a deeply interconnected world, the impact likely won't end there. JPMorgan CEO Jamie Dimon said in his annual shareholder letter he expects the war and sanctions on Russia to slow the global economy at large.

In addition, he wrote, more sanctions could be added. "Along with the unpredictability of war itself and the uncertainty surrounding global commodity supply chains, this makes for a potentially explosive situation," he said.

Cited:  Construction Dive

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Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker.  Real estate is the business of exchange and affects every person on the planet.  Real estate on all levels represents resources, access and ultimately, power.  Knowledge is power…