Project delays due to the coronavirus outbreak continue to decrease, according to the Q3 2021 Commercial Construction Index (CCI), released quarterly by the U.S. Chamber of Commerce and Dodge Data & Analytics, This quarter, 60% are experiencing delays on some projects, down 12 points from last quarter. Even fewer (56%) expect delays to continue in three months—this is down from 68% in Q2. Only half (50%) expect delays to continue for six months, which decreased from 55% in Q2.
The average percentage of projects delayed improved again this quarter. In Q2, contractors reported 17% of their projects were delayed, on average.
This quarter, contractors reported on average 15% of their projects are currently delayed. However, looking ahead, contractors predict delays tailing off slowly. In three months, contractors expect an average share of 14% of their projects will be delayed, and in six months, that share is 11%.
Steady Revenue and Finances
The majority of contractors anticipate few changes in both revenue and profits over the coming year. Most contractors (63%) expect their profit margins to remain about the same over the next 12 months (down from 70% in Q2). This quarter, the percentage of contractors expecting an increase in profit margin stayed the same as last quarter at 24%, while those expecting a decrease rose (13% expect a decrease, up seven points from last quarter).
More than half of contractors (53%) expect their revenues to remain about the same in the next 12 months, and 37% expect their revenue to increase over the next year (down two points from last quarter). Meanwhile, only 10% of contractors expect revenue decreases over the next year. Those expecting changes predict they will be small.
Of those expecting an increase in revenue, 43% believe it will be an increase of up to 3%. Of those expecting a decrease, 40% believe it will be a decrease of up to 3%.
Similarly, most contractors see little change in access to financing. More than two-thirds (67%) of contractors expect their access to working capital financing will remain about the same in the next six months, while just 6% expect it will get easier (down from 10% in Q2 2021). Meanwhile, 65% of contractors believe that owner/developer access to financing will get easier or remain about the same within that same timeframe.
Concern for Building Materials
Contractors’ concern about the cost of building materials reached an all-time high this quarter since the CCI’s inception in 2017. This quarter, most (98%) contractors indicate cost fluctuations have a moderate-to-high impact on their business. This figure is up four points since Q2 and 35 points year-over-year (63% reported moderate-to-high impacts from cost fluctuations in Q3 2020).
Click here to read part one of this article about the slight improvement in contractors’ confidence in the commercial construction industry.