ECONOMIC CRISIS ADAPTATION IN SRI LANKAN CONSTRUCTION INDUSTRY: PATHWAY TO PROSPERITY

. The construction industry is a critical sector in the nation’s e conomic growth, accounting for a sizable share of GDP growth. However, it is the most vulnerable industry to a financial depression, whether local or worldwide. The present economic crisis has had an impact on the Sri Lankan construction industry, with more than half a million employees lost their jobs in the previous year. Many major construction firms have either paused or abandoned their projects and shifted to overseas construction. Therefore, understanding the consequences of financial crises regarding construction initiatives in Sri Lanka, as well as anticipated post-crisis growth paths in this sector, necessitates a thorough examination. The goal of this study is to extensively examine the consequences of the 2022 economic crisis on Sri Lankan construction projects and investigate remedies that might start a post-crisis rebound. The study utilized a mixed-method approach, combining quantitative and qualitative research methods. Purposive sampling was used to choose construction industry participants from various backgrounds in order to get a varied range of perspectives. The findings of this study not only emphasize the negative consequences of the crisis but also reveal prospects for development within the industry. The article offers construction professionals and other industry stakeholders useful insights about the foreseeable future of the country’s construction sector. The research looks at prospective growth areas such as the development of infrastructure, sustainable construction strategies, and the usage of emerging technology. The findings of the research can help to ensure that the sector has a robust and productive future.


INTRODUCTION
The global economic landscape has seen its fair share of turmoil, and the ramifications of economic crises ricochet throughout numerous sectors, having a significant influence on industries and their stakeholders.The construction sector of a country is one of the most sensitive to such a crisis since it serves as the backbone for a country's economic progress (Bhagatkar et al., 2015).The status of the construction sector demonstrates the current condition of the country's economy and has a significant impact on gross domestic product (GDP) growth (Abeysinghe & Jayathilaka, 2022).Sri Lanka's gross national product (GNP) was USD 22.23 billion in 2021, an increase of 3.67 % over the previous year (Macrotrends, 2022).As a result, industry analysts expect the construction industry in Sri Lanka will see an unprecedented boom in the future years, after COVID-19 and the recent economic crisis.
The global financial crisis that shook the global economy from 2008 to 2009 was regarded as the most severe economic slump since the great depression of the 1930s.It was marked by the dropping of Sri Lanka's key economic indicators (KEI) (Perera & Waidyasekara, 2015).Though the industry witnessed tremendous expansion after that, particularly in the development of Sri Lanka's infrastructure, it was once again hit by the worldwide COVID-19 pandemic between 2019 and 2021.According to Pathirana (2021), most of the ongoing projects during the period of 2019-2021 have been paused or suspended, while domestic clients and contractors are running their companies with inadequate financial reserves, placing them in a precarious situation and compromising their market shares to competitors.However, during the post-covid era, the GDP from construction increased to USD 3545.43 million in 2021, from USD 3138.26 million in 2020 (Namarathna & Gunarathna, 2022).
Yet the construction industry was again hit by the recent economic crisis in early 2022.This crisis, marked by a severe economic slump and great political instability, had far-reaching consequences for many industries, including the construction industry.The repercussions of the recession were obvious in the construction sector, mostly in the form of contract postponement or cancellation.In the worst-case scenario, construction firms went bankrupt owing to financial difficulties.Furthermore, a significant devaluation of the national currency versus the US dollar signaled the economic impact on Sri Lanka.This has had a detrimental impact on the sector since it has created an additional expense for stakeholders.The current situation has forced contractors, clients, and material suppliers to cope with challenges such as project completion on time, expecting materials on time and at the correct cost, and, ultimately, ensuring that the final product meets specified objectives.
Therefore, understanding the effects of financial crises on construction endeavors in Sri Lanka, as well as prospective post-crisis growth routes in this sector, requires a comprehensive analysis.Existing literature focuses mostly on broad economic and financial factors, sometimes overlooking the subtleties and complexity of the construction sector.As a result, there is a significant gap in the understanding of the specific consequences of economic crises on Sri Lankan construction projects, such as project delays, cost overruns, and resource restrictions.Furthermore, little attention has been paid to identifying and assessing post-crisis growth plans and prospects in Sri Lanka's construction industry.This study seeks to address this void by thoroughly investigating the effects of the economic crisis in 2022 on Sri Lankan construction endeavors and investigating alternatives that might spark a post-crisis recovery.To address the gap in effectively overcoming the economic crisis, the following research questions have been formulated: 1. What are the specific effects of the recession on Sri Lankan construction projects?2. What strategies has Sri Lanka's construction industry used to offset the detrimental impact of its financial crises?3. What are the primary opportunities and tactics for encouraging post-crisis growth in Sri Lanka's construction industry?To address the above-mentioned research questions, the following primary objectives have been set: − To assess the impact of the economic downturn on the construction industry; − To identify resilience strategies in response to the economic crisis to recommend post-crisis growth initiatives.

Construction Industry in Sri Lanka and the Economic Impact
The term "construction" comes from the verb "construct," which means "to build something."The term "construction" is defined as "building physical facilities and developing other related activities" (Gnanothayan & Kauškale, 2022).
Apart from tourism, the construction sector is one of the nation's most important contributors to Sri Lanka's growth in economy.Following the end of the country's civil conflict in 2009, the industry experienced massive infrastructure development (Jayalath & Gunawardhana, 2017).However, the construction industry has suffered because of COVID-19 and the current economic downturn.Construction operations were significantly affected by both supply and demand restrictions, resulting in a 20.9 % loss in value-added in 2022, compared to a 4.4 % increase in 2021 (Central Bank of Sri Lanka, 2022).This is owing to the country's diminishing foreign exchange reserves, rising debt, and political and economic uncertainty.The scarcity of cement as a consequence of import restrictions imposed by the government to maintain its falling foreign exchange reserves is a major impediment to construction activities.As a result, there are insufficient inputs to produce raw materials locally.
Sri Lanka has a long and important history of economic growth.Unlike the Great Depression of 1929, the 2009 economic slump was characterized by a considerable worsening in global macroeconomic circumstances as well as significantly lower revisions to growth predictions (Perera & Waidyasekara, 2015).In 2012, the construction industry generated 9.4 % of the GDP in Sri Lanka (Central Bank of Sri Lanka, 2022).Thus, the worldwide economic slump induced by the economic downturn had an influence on the actual economy, with signals obvious in the construction industry, mostly in the form of investment deferral and/or contract cancellation.This was then followed by the recent economic crisis hit in early 2022.The economic and political crises, as well as their influence on construction development, had a significant impact on industrial output in 2022.According to GlobalData (2022), the National Construction Association of Sri Lanka (NCASL) reported in late September 2022 that activity in the construction industry had collapsed, with 90 % of work across the country coming to a halt, primarily due to a shortage of cement, iron, and other raw materials; this is expected to result in the loss of 75 % of the industry's workforce.
Furthermore, according to Trading Economics (2022), from 2010 to 2023, GDP from Construction in Sri Lanka averaged USD 727.34 million, with a peak of USD 1544.01 million in the fourth quarter of 2017 and a low of USD 238.45 million in the second quarter of 2010. Figure 1 depicts the GDP contribution of Sri Lanka's construction industry.According to the graph above, the construction operations functioned well before January 2022.However, it is clear that the economic crisis and political instability that began in early 2022 had a significant impact on GDP contribution.
As a result of the country's current condition, the industry must examine different ways to improve construction operations and overcome the impact of the economic crisis, and this is a once-in-a-lifetime chance for the building sector to seek and further develop the industry.

Strategies and Opportunities for Post-crisis Growth
The current economic crisis has had a severe influence on the Sri Lankan construction sector, necessitating a rethinking of strategy and the discovery of prospects for its recovery and expansion.It can go into the many solutions that the Sri Lankan construction sector might use to handle the economic crisis challenges.Furthermore, the possible chances that may arise as a result of the crisis permit the sector not just to recover but also to grow in the long term.
Diversifying services beyond typical building projects is a significant goal for the Sri Lankan building industry.The sector may tap into growing markets that correlate with global trends by branching into fields such as infrastructure for renewable energy sources, digitization, and green construction practices (Presidential Expert Committee, 2019).Adopting sophisticated construction technologies such as Building Information Modeling (BIM) and prefabricated products can improve efficiency and save costs.These tools improve the planning of projects, coordination, and resource allocation (Hatmoko et al. 2019).Cooperation with the government to obtain infrastructure development projects may offer the business a consistent flow of work.To finance and manage largescale projects, public-private partnerships (PPPs) might be explored (Dabarera et al., 2019).
Because of the economic downturn, there may be a greater emphasis on restoring old infrastructure instead of investing in wholly new developments.This provides a potential for Sri Lanka's construction sector to provide expertise in rehabilitation, retrofitting, maintenance, and repair services (The World Bank, 2022).In Sri Lanka, there is an increasing demand for inexpensive housing.Construction enterprises may contribute to societal development while also earning cash by aligning with this need (Ministry of Disaster Management, 2015).The tourism industry in Sri Lanka has enormous potential.Investing in tourism infrastructure such as resorts, hotels, and recreational facilities may boost economic growth and create jobs (Asian Development Bank, 2019).

RESEARCH METHODOLOGY
This section describes the processes and procedures used to gather and analyze data.

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To get a thorough knowledge of the impact of the economic crisis on the Sri Lankan construction sector and the potential for post-crisis growth, the research used a mixed-method approach, integrating both quantitative and qualitative research methods.To obtain quantitative data on the impact of the economic crisis and their assessments of recovery prospects, a questionnaire was distributed to construction industry specialists.As a qualitative approach, a comprehensive literature review was conducted to identify the particular barriers or interruptions the construction sector faces, mitigation strategies that construction companies have adopted to face such an impact, and major possibilities for the construction industry to recover and grow following the economic crisis.Furthermore, five semistructured interviews were conducted with industry professionals who have working experience with the Sri Lankan construction sector for more than five years.Interviewing potential stakeholders from the industry to obtain qualitative information would enable the research findings to be more discussion possible.
Purposive sampling was utilized to choose construction sector participants from different backgrounds in order to gather a diverse variety of viewpoints.Content analysis was used to analyze the qualitative data obtained from the interviews.
Table 1 below illustrates the response rate for the questionnaire survey distributed among the respondents.Table 2 shows the demographics of the respondents who took part in the interview.This diverse representation across a wide range of professional vocations emphasizes the dataset diversity and enhances the credibility and applicability of the subsequent study (Weerakoon et al., 2023).

Occupational Profile of the Survey Participants
The questionnaire elicited responses from a wide set of professionals, each of whom represented a distinct segment of the labor market in the construction sector.Engineers represent the greatest proportion of the respondents' population (47.4 %), accounting for nearly half of all respondents.Their considerable presence implies a strong involvement of engineering specialists in the research.Despite being a minor group (14 %), project managers represent an important part of the sample.Their project management experience may give useful insights into the study issue.Architects, while accounting for a fairly small part (12.3 %), contribute a distinct viewpoint to the research owing to their emphasis on design and spatial planning.The presence of government employees in the sample (10.5 %) is relevant because it indicates potential consequences for public policies or laws connected to the study issue.Quantity surveyors (8.8 %), who specialize in estimating costs and project management, provide a unique and useful perspective.Economists, while being a smaller section (7 %), can give fruitful ideas into the economic elements of the research topic, which might be very useful based on the nature of the research.Figure 3 illustrates the occupational profile of those who participated in the survey.The range of respondents' employment background is a strength of this study since it brings together varied viewpoints and thoughts.This variety can add to the breadth and depth of the research conclusions.
The respondents' construction sector experiences span a wide variety of career lengths.The participation of respondents with diverse degrees of experience guarantees that the study issue is thoroughly examined.It allows collecting ideas from people at all phases of their professional life, from beginners to experienced professionals.A sizable proportion of respondents, 42.1 %, are in the early phases of their careers.This group is most likely made up of newcomers who will contribute new views and ideas to the research.A sizable percentage, 26.3 %, has intermediate experience levels of 5 to 10 years, indicating a mix of freshman and moderately experienced experts.Their combined expertise and practical experience can help to provide a well-rounded analysis.Almost one-fifth of those who responded, 19.3 %, have 10 to 15 years of construction experience.The term of this group shows a more extensive engagement in many facets of the field, which might provide deeper insights.Respondents with more than 15 years of experience constitute a highly experienced professional category, accounting for 12.3 % of the sample.Their significant industry experience and skills can give insightful perspectives on the study issue, perhaps revealing delicate findings.Figure 4 depicts the respondents' industry experiences.

Impact of the Economic Crisis on Construction Projects
According to the survey results, the vast majority of respondents' organizations, 71.9 % were directly involved in construction projects throughout the recent economic drop, while 28.1 % stated that they were not involved in any construction activity during the period of crisis.The fact that approximately threequarters of the surveyed participants continued to work on construction projects throughout the economic downturn indicates the industry's resilience.It demonstrates a commitment to continue operating despite difficult economic situations.Companies that continued to work on building and infrastructure projects during the recession most often responded to changing market circumstances.
Furthermore, when asked whether their initiatives were badly impacted by the financial crisis, a significant majority, 75.4 %, replied that they were.This implies that, despite their engagement in construction projects, many organizations encountered difficulties during this time period.This could be a result of several reasons such as financial strains, operational challenges, and market uncertainty.Financial issues may include delayed payments, budget overruns, and foreign direct investments (FDI) issues.Operational challenges may arise in the form of supply chain disruptions, labor shortages, and delayed project timelines.Figure 5 illustrates the respondents' perception of the specific challenges and disruptions the construction projects in Sri Lanka faced during the economic crisis.According to Fig. 5, a large proportion of respondents, around 77.2 %, recognized two main issues that construction projects faced during this time period, namely, delayed project schedules and budget overruns.These findings illustrate the broad effect of the economic recession on the scheduling of projects and financial management in the construction industry.Furthermore, 57.9 % of respondents stressed a lack of investment in new construction initiatives as a significant concern.This shows reluctance or constraints in starting new construction projects during economic downturns, thereby impeding the industry's expansion and development.The analysis also found that transportation challenges (54.4 %) and supply chain interruptions (52.7 %) were primary worries for construction professionals.These issues are likely to have led to project delays and cost overruns, emphasizing the complex character of the crisis's impact on construction endeavors.Another significant concern identified by 47.4 % of the participants was labor shortages.Such shortages can stymie development and raise project costs since contractors may have to pay higher rates or outsource labor from other sources.Lastly, while 31.6 % of respondents reported quality maintenance difficulties, it is worth noting that this issue, while less widespread than others, nevertheless accounts for a sizable proportion of respondents.Maintaining high standards in times of economic hardship can have long-term consequences for the industry image and viability.Finally, the survey data highlights the complex and linked obstacles associated with construction projects in Sri Lanka encountered throughout the economic crisis.These findings are critical for the public and private sectors that are involved in construction to develop effective measures for minimizing the adverse effects of financial crises on construction operations and developing industry resilience.
Furthermore, interviewed stakeholders from the construction industry also elaborated valuable thoughts on this by highlighting key challenges and disruptions (see Table 3) that the construction sector experienced during the economic recession.This urged the industry to seek alternative approaches to work against the economic recession and therefore, several important methods appear as widespread and influential based on survey data addressing mitigation measures that firms might do to survive economic crises (see Fig. 6).

Fig. 6. Respondents' views on key mitigation measure against economic recession
(developed by the authors).
As illustrated in Fig. 6, 82.5 % of the participants pointed out cash flow management as a major mitigating approach.This emphasizes the necessity of maintaining a solid financial standing during difficult economic times, as good cash flow management may assist firms in navigating uncertainty and meeting their financial responsibilities.71.9 % of participants chose cost-cutting techniques such as contract renegotiation and resource allocation optimization.This shows that firms acknowledge the need to simplify their operations and cut costs in order to successfully survive economic downturns.Implementing these steps can assist companies in maintaining financial stability and resilience.Supply chain optimization was recognized as a key mitigation method by 56.1 % of respondents.Improving the resilience of supply chains can help reduce interruptions and assure the availability of critical resources, thereby improving an organization's capacity to respond to economic crises.Another critical tactic, as mentioned by 52.6 % of individuals, is the development of comprehensive risk management strategies.Effective risk management enables firms to proactively detect and handle potential risks, reducing the detrimental effect of economic downturns on their operations.Strategic relationships and seeking other finance sources, both chosen by 38.6 % of respondents, emphasize the importance of collaboration and diversity of financial streams.Strategic alliances can provide access to resources and knowledge, while joint ventures and public-private partnerships can provide alternative funding.Service diversity, as selected by 31.6 % of those who responded, demonstrates an adaptation approach.By responding to shifting market demands, firms may pivot through economic downturns and sustain income streams.As chosen by 40.4 % of respondents, incorporating environmentally friendly construction approaches demonstrates a greater understanding of the long-term advantages of environmental stewardship.These approaches can boost an organization's resilience by lowering long-term operating expenses and aligning with changing market demands.Furthermore, interviewing key industry stakeholders has provided valuable thoughts in this regard.According to R2, "Architectural and other design firms can diversify their services and products to offer cost-effective design solutions by renovating or repurposing existing structures".Moreover, R3 stated that "implementing rigorous cost control measures and value engineering to optimize project costs without compromising the quality and ensure robust contract terms and risk allocations" could act as promising mitigation measures.Another valuable input given by R5 was "exploring innovative financing options such as crowdfunding, joint ventures, or project bonds to secure funds for critical project tasks".
Table 4 outlines the summary of the mitigation measures proposed by each interviewee to overcome and strongly face economic recessions.

Key Enablers for Post-Crisis Growth
According to survey data on the main enablers, for the Sri Lankan construction industry to recover and flourish from the economic crisis, many strategic paths stand out as critical for the industry's regeneration and expansion (see Fig. 7).Green building approaches, which are supported by 73.7 % of respondents, provide considerable potential.Adopting sustainability not only coincides with global environmental trends but may also result in long-term economic savings.Using environmentally friendly building technologies may improve the industry image

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_________________________________________________________________________________2023 /11 and competitiveness.Projects that collaborate with foreign investors, chosen by 61.4 % of participants, have the ability to bring much-needed finance and experience into the Sri Lankan construction industry.Such collaborations may help with the carrying out of bigger and more complicated projects, as well as boost economic growth and information sharing.Investing in massive infrastructure projects is critical for the industry rebirth, according to 49.1 % of respondents.These projects may act as economic catalysts, creating jobs and increasing demand for construction-related services and supplies.Exploring novel finance solutions is another opportunity for industry growth, as endorsed by 49.1 % of participants.Diversifying finance sources, such as public-private partnerships or other funding structures, can give the financial resources needed to embark on big building projects.Expanding construction service and material exports, as highlighted by 59.6 % of respondents, demonstrates the possibility for worldwide market development.This has the potential to increase income streams, establish exportoriented enterprises, and raise the industry worldwide competitiveness.Favorable regulatory and policy reforms, supported by 50.9 % of poll respondents, are critical in building an enabling climate for industrial revival.Streamlined laws and can attract investment, lower bureaucratic barriers, and establish a favorable environment for construction companies.Skilled labor training, which is endorsed by 54.4 % of those surveyed, is critical for guaranteeing a competent workforce.Investment in vocational education and training can improve the industry's capacity to satisfy quality and productivity expectations, both domestically and globally.Although chosen by 38.6 % of participants, promoting digital building technology indicates the rising relevance of adopting technological breakthroughs.Adopting digital technologies and processes can result in enhanced productivity, lower costs, and better project management.support recovery and promote long-term growth in the aftermath of the crisis.The research highlights the importance of the construction sector, in Sri Lanka's progress and acknowledges the significant obstacles it encounters during periods of economic decline as exemplified by the 2022 crisis.
The economic crisis significantly disrupted ongoing construction projects, causing delays and budget overruns.This underscores the vulnerability of the industry to economic fluctuations, affecting project schedules and financial stability.The disruption in supply chains, transportation challenges, labor shortages, and difficulties in maintaining quality further compounded the challenges faced by the construction industry during the crisis.These findings align with past studies that highlight the detrimental effects of economic downturns on construction projects (Abeysinghe & Jayathilaka, 2022).In response to the crisis, construction firms implemented various resilience strategies.Effective cash flow management and cost-cutting measures were identified as critical strategies to navigate the economic challenges.Streamlining supply chains, comprehensive risk management, and seeking alternative finance sources were also deemed essential.Tables 3, 4, and 5 together highlight the necessity for a comprehensive strategy for dealing with challenges, navigating economic recessions, and stimulating development in the construction industry.During a downturn in the economy, effective resource management, simplified operations, and preemptive risk assessment are critical (Obrenovic et al., 2020).Collaboration among stakeholders and the implementation of innovative finance strategies may aid in the maintenance of financial stability and the reduction of cash flow interruptions (Pu et al., 2021).These strategies align with existing literature that emphasizes the importance of financial management and strategic approaches to mitigate the impact of economic downturns on the construction sector (Bhagatkar et al., 2015).
Looking toward the post-crisis period, several enablers were identified to promote recovery and growth in the construction industry.Embracing green building approaches, collaborating with foreign investors, and investing in massive infrastructure projects were highlighted as significant strategies.Additionally, exploring novel finance solutions and expanding construction service and material exports were recognized as avenues for growth.Furthermore, rather than importing materials or consuming vast amounts of natural resources, it is ideal to seek alternative approaches to use solid waste and construction demolition waste (CDW) as secondary materials in construction operations (Weerakoon et al., 2023).These findings are consistent with previous research, which advocates for sustainable practices and international collaborations to foster growth in the construction sector (Presidential Expert Committee, 2019;Dabarera et al., 2019).Furthermore, postcrisis development necessitates fundamental construction industry change.To overcome the knowledge gap and promote a complete grasp of circular economy principles, stakeholders must embrace sustainability via green practices and circular design methodologies, in conjunction with educational programmes and awareness campaigns (Weerakoon et al., 2023).Participating in PPPs and attracting foreign investment are critical steps toward promoting infrastructure development and economic growth.Political stability and government actions are critical in fostering a favorable environment for development (Clark et al., 2018).A supportive

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CONCLUSION
The research findings revealed different repercussions of economic downturns, highlighting critical issues such as project timeline delays, budget overruns, inadequate investment in new projects, transportation difficulties, supply chain disruptions, labor shortages, and concerns about maintaining quality.Nonetheless, the research revealed the construction industry capacity to adapt and persist.Respondents suggested a variety of strategies to address these challenges, including effective cash flow management, cost-cutting techniques, enhancing the supply chain, comprehensive risk management planning, forming strategic partnerships, diversifying, seeking alternative financial sources, and implementing sustainable building practices.These tactics can be beneficial for construction businesses that want not only to survive but also thrive during economic downturns.
In the midst of economic ambiguity, the Sri Lankan construction industry has a chance to reposition itself as a robust and wealthy industry.Stakeholders, politicians, and industry leaders could develop informed plans to strengthen the construction industry capability to adjust, innovate, and prosper in an ever-changing economic context by harnessing the insights garnered from this research.Finally, the sector ability to overcome problems while integrating sustainability, innovation, and teamwork will pave the way for a better future for the construction sector in Sri Lanka.
Figure 2 displays the flowchart of the study research procedure.

Fig. 2 .
Fig. 2. The flowchart of the research process (developed by authors).

Fig. 3 .
Fig. 3. Occupational profile of the respondents participated in the survey (developed by authors).

Fig. 4 .
Fig. 4. Survey respondents' experience in the construction industry (developed by authors).

Fig. 5 .
Fig. 5. Challenges faced by the construction projects during economic recession (developed by the authors).

Fig. 7 .
Fig. 7. Respondents' perception on key enablers for industry development after economic crisis (developed by the authors).

Table 1 .
The Response Rate for the Questionnaire Survey (developed by the authors)

Table 2 .
Profile of Interview Participants (developed by the authors)

Table 3 .
Interviewees' Responses Regarding Key Challenges during the Economic Crisis (developed by the authors)

Table 4 .
Interviewees' Responses Regarding Mitigation Strategies against the Economic Crisis (developed by the authors)