Construction Contractors Report Increased Pessimism for 2021

Contractors expect demand for work in most markets to decrease in 2021, with the highest degree of pessimism focused on the retail, lodging, private office and higher education segments. That’s according to the “2021 Construction Outlook National Survey Results,” conducted by the Associated General Contractors of America and Sage Construction. The only segments that are expected to see increased demand are healthcare facilities such as clinics, testing facilities and medical labs; warehouses and water/sewer infrastructure.

“This is clearly going to be a difficult year for the construction industry,” says Stephen E. Sandherr, AGC of America’s chief executive officer. “Demand looks likely to continue shrinking, projects are getting delayed or canceled, productivity is declining, and few firms plan to expand their headcount.”

Headcount and Benefits

Of the contractors surveyed, 35% expect an increase in their firm’s headcount in 2021 while 24% expect a decrease and 41% expect no change. However, more than half of contractors reported having a hard time filling some or all positions. Only 18% reported having no difficulty filling positions while 29% responded that they have no openings. One-third of contractors expect the availability of hourly craft or salaried personnel to remain the same over the next 12 months. Twenty-eight percent of contractors surveyed expect it to continue to be hard to hire and 21% expect it to become harder. Only 15% expect it to become easier to hire over the next 12 months.

When asked whether contractors’ firms increased or decreased pay or benefits in 2020, approximately one-third of contractors surveyed reported that they did not change base pay rates in 2020. One-third increased base pay rates by similar amounts in 2020 and 2019, while one-quarter of respondents provided incentives/bonuses in 2020.

Pandemic Impacts

The most common response to how the pandemic has impacted contractors’ projects is that projects have taken longer than anticipated. That was the response from nearly two-thirds of contractors. Fifty-four percent responded that costs have been higher than anticipated, one-third reported that their firm has put higher prices into its bids/contracts, one-fourth reported that they have won new projects or add-ons to existing projects and one-fourth reported that they have put longer competition times into their bids/contracts.

When it comes to projects being postponed or canceled, 59% of contractors reported that an owner postponed a project from 2020 to 2021. Forty-four percent of contractors reported that an owner canceled a project in 2020 that wasn’t rescheduled. Only 22% said that no projects were postponed or canceled.

One-third of contractors surveyed responded to a question about when they expect their firm’s volume of business to return to its normal level relative to one year earlier by stating that it already matches or exceeds the year-ago level. Twelve percent expect business to return to that level in one to six months, 35% expect it to take more than six months (or never) and 20% don’t know.

Click here to read part two of this article.

This entry was posted in Featured News, News, Today's News and tagged , , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.