The percentage of construction firms, including subcontractors, that have halted projects due to a government order has decreased in the past two weeks. According to a new survey from the Associated General Contractors (AGC) of America, 68% of contractors surveyed between May 4-7 have been directed to halt or cancel work on a current or upcoming projects. Of those, 30% reported that the halt was in response to a government order, down from 35% two weeks ago.
Other reasons an owner halted construction include:
- Concern about COVID-19 danger surrounding a project (37%);
- Expectation of reduced demand for a project (31%);
- Loss of private funding (21%); and
- Loss of current of expected tax/fee/toll revenue (9%).
Of the projects halted or canceled, 20% of respondents reported that a canceled project was scheduled to start in April, 19% reported that a canceled project was scheduled to start in May and 19% reported that a project was scheduled to start in June or later.
These cancellations have forced some firms to cut staff, with 23% of contractors reporting that they cut staff in March and 22% cut staff in April. In a webinar about the report, AGC chief economist Ken Simonson said the job losses would likely have been worse if not for the federal government’s Paycheck Protection Program (PPP) loans, noting that 80% of respondents report having applied for the loans and most having been approved. However, due to updated government guidance on eligibility for PPP loans, 18% of firms report they are considering returning the funds, and most of these will be forced to cut staff as a result. Simonson added that is one reason why 12% of firms report they plan to make additional layoffs within the next four weeks. However, 18% of firms surveyed do anticipate needing to add employees in the next four weeks.
“Unfortunately, our survey indicates that layoffs are continuing to occur throughout the nation,” said Simonson. “Between March 1 and May 1, 39% of responding firms reduced their headcount. Reductions were particularly severe in the Northeast, where 53% of firms terminated or furloughed employees. The South had the fewest firms reporting staff reductions—29%, while 38% of firms in the Midwest and 45% in the West reduced headcount.”
Construction firms are also reporting project delays or disruptions due to the following reasons:
- Shortage of personal protective equipment;
- A shortage of construction materials, equipment or parts;
- A shortage of craft workers;
- Information that an infected individual has potentially infected a jobsite; and
- A lack of needed government action or workers.
Nearly half of contractors have been notified that a delivery will be late or canceled.
While more than three quarters of contractors surveyed report that they haven’t begun working on any new or expanded construction as a result of the pandemic, 9% reported that they began new medical-related construction in April, the most of any sector.