Survey: More Contractors Are Experiencing Project Disruptions than in August

More than three-fourths of contractors currently are experiencing project delays or disruptions, though the reasons vary according to a new survey from the Associated General Contractors of America (AGC). That’s up from 57% in June. Nearly half of contractors cited construction materials, equipment or part shortages for the delays while 35% cited a shortage of craftworkers and subcontractors. Nearly one-third of contractors surveyed who have experienced project delays cite a potentially infected person visiting a jobsite as the cause.

Seventy-five percent of respondents reported that an owner has postponed or cancelled work on upcoming projects. That’s up from 60% in August and 30% in June. Most of those postponements and cancelations impacted projects scheduled for March through September of 2020. However, 20% of respondents report that projects in the first half of 2021 have been postponed or canceled by owners.

Only 23% of respondents have begun working on new or expanded construction as a result of the pandemic. The majority of those projects have been medical facilities.

The pandemic has also impacted deliveries. More than half of contractors surveyed reported that a supplier had notified them or their subcontractors that a delivery would be late or canceled.

When it comes to headcount, 27% of contractors surveyed added employees, 30% furloughed or terminated employees and 49% reported no change in headcount. Three-fourths of contractors surveyed did not furlough any employees but 10% did and have not tried to recall any of those employees while 17% did and have tried recalling furloughed employees. Some contractors’ employees have refused to work, citing either a preference for unemployment benefits, COVID-19 concerns or other reasons.

Hiring could improve in the next year as 37% of respondents report that they expect their firm’s headcount to increase over the next 12 months compared to 20% expecting a decrease.

While the construction industry is continuing to recover from business slowdowns due to shutdowns and other pandemic-related issues, 35% of contractors surveyed report that their business volume already matches or exceeds year-ago levels. This isn’t true for everyone. Ten percent of respondents expect their firm’s business volume to return to its normal level relative to one year ago in one to six months. One-third expect to return to a normal level after more than six months. Only 1% responded with “never” while 21% responded that they don’t know.

“The survey results make it clear that the months-long pandemic is undermining demand for projects, disrupting vital supply chains and clouding the industry’s outlook,” said Ken Simonson, the association’s chief economist, during a survey presentation. “Without new federal relief measures, these challenges pose a significant threat to current construction employment levels.”

“As our survey shows, the pandemic and efforts to mitigate its spread have deeply wounded the economy, depressing demand for many types of commercial construction projects,” added Stephen E. Sandherr, the association’s chief executive officer. “Congress can end the downward economic slide and help create needed new construction jobs by passing measures to boost demand and protect honest employers.”

The survey was conducted between October 7-19, 2020.