June 27, 2020

AGC COVID-19 Survey Uncovers Mixed Outlook

The impact of the COVID-19 emergency including containment efforts have created challenging situations for many Atlanta businesses, both initially and through reopening. During the first weeks of forced business closures and shelter in place orders, individuals and businesses were required to significantly change everyday patterns. Not only were local stores, restaurants and gathering places closed, but many did not want to risk going out for fear of infection.  As the weeks passed businesses were challenged with difficult decisions about how to manage payroll and other expenses without revenue. For those who survived, the next challenge has been finding a path forward in a time of uncertainty. Although deemed an essential business, the construction industry has faced similar challenges from cancellations to a reduced number of new projects available. In fact, the latest Associated General Contractors (AGC) Coronavirus Survey results reflect a trend of continued project cancellations in contrast to increased hiring. To help clients, prospects and others, Wilson Lewis has provided a summary of key information below.  

About the Survey

The survey was conducted online between June 9^th – 17^th and includes 635 total responses. The survey included businesses focused on building construction, highway, utility, federal and other types of construction projects. The survey is part of an ongoing series conducted by the AGC.

Key Construction Survey Findings

• Project Cancellations – A driving force behind the uncertainty many construction contractors are experiencing arises from project delays and cancellation. It was discovered that 48% of respondents had projects delayed in May or earlier, 15% canceled projects scheduled to start in June, 20% scheduled to start in July, and 19% canceled projects scheduled to start in August or later. The good news is that 32% indicated there have been no project delays or cancellations.
• Reason for Cancellations – The survey also wanted to understand the reason why many projects are being canceled. It was found that 33% of respondents indicated owner concern about the COVID-19 danger surrounding projects, 28% owner’s expectation of reduced demand, 24% to comply with “non-essential” construction guidelines, 21% loss of funding and 14% loss of tax/fee/toll revenue. It is clear there are major concerns about how COVID-19 is impacting worker safety.
• Delay/Disruption Causes – In addition to the details outlined above the survey wanted to understand the challenges causing delays. It was found that 25% of respondents reported shortages of materials, equipment, or parts, a 24% shortage of craftworkers, 15% concern about infected job site workers, 14% lack of government action, 10% lack of PPE, and 8% due to cash flow issues. It was also found that 43% of respondents reported no delays due to similar issues. This is an encouraging sign as it reflects the readiness to complete new projects.
• Headcount Changes – Given the volatile situation, the survey was interested in learning about the resulting impact on headcount. It was found that 25% of respondents furloughed/terminated workers in May, 8% furloughed/terminated workers in June, and 16% plan to follow suit in the next four weeks. The good news is that 21% added employees in May, 12% added employees in June and 17% anticipate adding staff in the next four weeks. Finally, 46% reported no changes in headcount on the job site.
• Return to Normal – The one question on everyone’s mind is when will things return to normal. The survey posed the same questions and uncovered a range of responses. 26% of respondents reported the current volume of business matches last year, 30% believe it will take more than six months, 12% four to six months, 10% two to three months, 4% within a month and 17% are unsure when business will return to normal.

Contact Us

The survey results reflect both encouraging and discouraging signs. While each company is impacted differently by COVID-19, the findings provide important insights into top industry concerns. Looking ahead it is important to conduct comprehensive planning to ensure you are ready for whatever is next. If you have questions about the information outlined above or need assistance with business continuity or cash flow planning, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.