CCI: COVID-19 Causes Project Delays, Procedure Changes for Most Contractors

Nearly all contractors have experienced or are expecting project delays due to the COVID-19 pandemic. That’s according to the Q2 2020 Commercial Construction Index (CCI), released quarterly by USG Corp. and the U.S. Chamber of Commerce, which included a quarter spotlight focused on contractors’ response to COVID-19.

Project Delays

When asked if they are currently expecting project delays due to COVID-19, 87% of contractors said yes. The same percentage reported expecting project delays in the next three months and 73% expect delays in the next six months. However, fewer projects are expected to be delayed as the year progresses.

Percentage of Projects on Which Delays Are Expected
  Currently In 3 Months In 6 Months
75% of projects or more 35% 16% 8%
25% to 74% of projects 20% 41% 32%
10% to 24% of projects 23% 22% 21%
Fewer than 10% of projects 22% 21% 38%
Source: Q2 2020 Commercial Construction Index

“Currently, a higher percentage of contractors in the Northeast are expecting delays on

the majority of their projects than in other regions. The Northeast region includes many large jurisdictions (i.e., New York, Pennsylvania, Boston) with government mandates that shut down

most construction projects,” reads the report.

Contractor Concerns

Contractors were asked what the most severe consequences from COVID-19 are on their businesses. Three-fourths of contractors reported that worker health and safety is their biggest concern. Nearly half said fewer projects is the biggest concern and a third said an increase in workforce shortages. Other responses included less availability of building products/materials, more legal and/or financial liability, shortened hours of business operations and reduced financing for contractors.

When it comes to the availability or building products and materials, 41% of general contractors reported this would be a top challenge compared to only 12% or trade contractors.

Operation Changes

Nearly all contractors have made some changes to how they operate their business in response to the pandemic. Those changes include:

  • 92% of contractors have changed work procedures to increase social distancing;
  • 39% have asked project owners for adjustments to work/delivery schedules;
  • 34% have adjusted employee salaries, furloughed or laid off employees;
  • 8% have adopted more automation to enhance social distancing;
  • 2% have offered childcare support;
  • 2% have made no changes; and
  • 10% have done other changes such as remote working, supplying hand washing stations and extra PPE, and keeping workers on payroll to preserve their workforce.

“General contractors are also more frequently asking owners for adjustments to work/delivery

schedules, with over half (53%) reporting this, compared with just 29% of trade contractors,” reads the report.

Reducing Risk

Building strong relationships with owners (general contractors only) and building strong relationships with general contractors (trade contractors only) is the most commonly used and considered the most effective way to reduce negative impacts from business disruptions. That’s followed by building good relationship with workers, showing that relationship building overall is an important step to mitigate risk.

Diversifying types of work, increasing backlog and developing strong cross-functional teams seem to be underutilized tactics, as fewer than 50% of contractors reported having taken any of these steps in the past three years and more than 50% of contractors who have taken these steps consider each of these to be very or extremely effective.

Future Expectations

Contractors reported several expectations about how the COVID-19 experience will change how contractors do business in the future. Those expectations are:

  1. Adjustments to safety procedures and work processes.
  2. Staff working remotely.
  3. Better contracts.
  4. Increased attention to site/office sanitation.
  5. More remote meetings/use of collaboration tools.

Click here to read part one of this article about contractor confidence. Click here to read part three of this article about workforce, financing and materials trends.

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