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Majority of Contractors Fear Long-Term Implications of COVID-19 on Their Businesses, Survey Says

A recent survey reveals that most contractors have been negatively impacted by COVID-19 in some fashion, and they expect to see the trend continue into 2021.
By Maggie Murphy
October 2, 2020
Topics
Markets

In order to gauge contractors’ experiences and market predictions as the pandemic lasts through the remainder of 2020, Construction Executive conducted a survey of 263 contractors across the United States in late August. The results of that survey reveal that most contractors have been negatively impacted by COVID-19 in some fashion, and they expect to see the trend continue into 2021.

More than 85% of the contractors surveyed reported that they are currently experiencing project postponements or cancellations due to COVID-19. Supply chain disruptions, prolonged municipal permitting processes and delayed inspections due to office closures are all factors contributing to the increased rate of postponement and/or cancellation.

While many contractors have not yet seen drastic impacts to their business, as construction was in many areas considered an “essential” service, it is the long-term implications that seem to be most concerning. 70.3% of contractors do not expect the construction industry to stabilize until at least 2021, while an additional 10.4% say they believe it may never reach pre-pandemic levels.

Of the projects continuing to move forward, contractors ranked the following market sectors in order of highest to lowest viability:

  • Health Care (19.74%)
  • Government (15.34%)
  • Multifamily (14.77%)
  • Heavy/Highway (13.64%)
  • Manufacturing (12.93%)
  • Educational (11.36%)
  • Retail/Mixed Use (4.55%)
  • Offices (4.12%)
  • Institutional (Museums, Visitors Centers) (1.99%)
  • None of the above (1.56%)

Interestingly, an overwhelming 74.5% of contractors also shared that sales of newly built single-family residential homes are trending upward. 47.83% also reported an increase in new condominium sales.

Given the “new normal of social distancing,” with the CDC recommendations to maintain a distance of at least six feet between people, one might expect that office renovation projects would see an uptick. However, more than three-quarters of respondents (76.12%) stated that they have not found this to be the case. Concerns over indoor air quality and proper ventilation may have also led people to believe there would be a large increase in HVAC upgrade projects, but only 31.79% of respondents stated that this was the case.

When asked to share their top concerns over risks posed by the virus, the largest percentage (15.25%) of contractors said health fears about the virus itself were of utmost importance. Changing project timelines (13.19%), supply chain disruptions (11.7%) and shortage of available workers (10.44%) were also high on the list. Very few reported difficulty paying invoices (2.29%) or adoption of new technologies (4.7%) as major roadblocks in mitigating impacts of the pandemic.

The construction industry is historically known for being slow to adapt to change, particularly when it comes to implementing technology. A majority of contractors (69.15%), however, believe that the industry will see much more widespread adoption of technology post-COVID-19. A remote workforce and the need to optimize productivity levels are major drivers of this shift to a more tech-savvy construction industry.

Following the pandemic-induced recession, just over three-quarters of contractors (75.12%) believe that there will be more interest in construction training programs as people seek out new types of work. Specialty trades, apprenticeship programs, project management training and more tech-focused construction jobs were all listed as areas that contractors believe will see high levels of interest.

Happily, as it affects longer-term business continuity and retirement plans, most contractors (78.89%) reported that, as of the date of this survey, they have not had to delay or shift those plans as a direct result of the pandemic.

Infrastructure spending is a hot topic at the forefront of many contractors’ minds, with more than two-thirds (67.98%) reporting that it is at least moderately important to their business.

See here for more in-depth reporting and advice on how to cope with the effects of the pandemic.

by Maggie Murphy
Maggie Murphy is managing editor of Construction Executive.

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