CCI: Project Delays Improve but the Labor Shortage is Constant

The majority of contractors are currently experiencing project delays due to the COVID-19 pandemic as well as the effects of the skilled labor shortage; however, those percentages are slightly lower or unchanged compared to the third quarter of 2020. According to the Q4 2020 Commercial Construction Index (CCI), released quarterly by the U.S. Chamber of Commerce and Dodge Data & Analytics, 83% of contactors are experiencing project delays, down from 85% last quarter.

Of those contractors experiencing delays, 85% expect them to continue into early 2021 while 68% expect delays to continue into the 2021’s second quarter. However, the survey was conducted prior to the recent nationwide spike in COVID-19 cases. The average amount of delays that contractors are experiencing was unchanged from the Q3 2020 CCI report at 26%.

Of the challenges that the pandemic may present to contractors’ businesses, the top concerns include:

  • 64% of contractors say worker health and safety is a top concern;
  • 53% of contractors say more project shutdowns/delays are a top concern; and
  • 41% of contractors say less availability of building products and materials is a top concern.

Workforce Trends

The skilled labor shortage continues to be a challenge for contractors, as 83% report moderate to high levels of difficulty in finding skilled workers, the same percentage as last quarter. Despite this persistence, the percentage of contractors reporting a high level of difficulty finding skilled workers continues to decline, at 42%. That’s down one percentage point since the Q3 2020 CCI report and down 17 percentage points year-over-year.

However, most contractors (87%) express a moderate to high degree of concern about workers having adequate skill levels, of which 90% say it will stay the same or get worse in the next six months.

Contractors who report experiencing the effects of a skilled labor shortage are seeing an increasing impact on their business operations. These include:

  • 83% of contractors are asking skilled workers to do more work, up from last quarter;
  • 71% of contractors report struggling to meet schedule requirements, up from last quarter;
  • 58% of contractors are putting in higher bids, up from last quarter; and
  • 39% of contractors report turning down work opportunities, up from last quarter.

Many contractors plan to retain their current staffing levels, but more this quarter said they plan to either hire or let go of staff. Of the contractors surveyed, 37% expect to employ more people, 46% expect to keep the same staffing and 12% expect to employ fewer people over the next six months. In Q3 2020, 32% of contractors said they planned to employ more people while 7% expected to employ fewer people. And of those who said they will employ more people in the next six months, 95% say it will be a small to moderate increase.

Click here to read part one of this article about contractor confidence and click here to read part three of this article about key market trends.

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