AGC: Contractors still grapple with cost increases, delays a year after outbreak

A year after the outbreak of the COVID-19 pandemic, contractors continue to deal with project delays and shutdowns, higher materials costs and supply-chain disruptions.

That’s according to a survey from the Associated General Contractors of America measuring how the construction industry is faring amid the coronavirus pandemic. While many contractors report that it’s now costlier to do businesses than it was a year ago, the survey found employment has held stable and many companies expect to be hiring in the next year.

“The survey results make it clear that the construction industry faces a variety of challenges that threaten to leave many firms and workers behind, even as some parts of the economy are recovering or even thriving,” said Ken Simonson, the association’s chief economist. “The pandemic has left the supply chain for a range of key construction components in tatters and undermined demand for a host of private-sector projects.”

The AGC had more than 1,400 respondents to its national survey, 21 of which were Wisconsin companies. Wisconsin’s results largely mirror national findings. Contractors on the east coast were generally more pessimistic about the industry’s outlook, and those on the west coast were more optimistic.

The results show project delays or cancellations were widespread across the construction industry.

Almost all Wisconsin respondents — 92% of the total — said the pandemic had caused an owner to cancel or postpone a project in 2020 or 2021. National survey results mirror that finding.

Construction companies are also paying more for materials and equipment than they had paid before the pandemic.

Each respondent to the survey in Wisconsin said they had seen materials prices increase from a year ago. And about half of the Wisconsin respondents said a shortage of materials, equipment or parts were contributing to project delays or disruptions.

By contrast, about a third of the respondents said projects were delayed or disrupted because a person had been infected with COVID-19 on a jobsite.

The pandemic meanwhile hasn’t led to new work for most companies. More than two-thirds of the respondents said they hadn’t seen any new projects emerge because of COVID-19.

Still, employment in the construction industry has remained mostly consistent.

More than three-quarters of the Wisconsin respondents said their headcount remains the same a year after the outbreak of the pandemic. And about half of Wisconsin contractors said they expected to increase their counts in the coming year.

Wisconsin contractors were more splintered when asked when they expected their business would return to what it had been before the pandemic.

More than two-thirds, or 38%, of all Wisconsin contractors said they expected it would take six months or more for business to return to normal.

Meanwhile, one in five of the Wisconsin contractors surveyed said their business had already met or exceeded last year’s levels.

Larger contractors appear to be in better shape than smaller firms a year after the pandemic, according to Simonson. AGC considers about half of Wisconsin’s respondents small contractors that perform $50 million or less annually.

“The smallest firms less are less than half as likely to say they have won additional projects and only half as likely to say revenue matches year-ago levels,” he said.

The trade group, meanwhile, is pressuring the Biden administration to eliminate tariffs to ease prices on essential materials — such as lumber. AGC is also urging federal lawmakers to set aside more money for infrastructure spending and oppose the so-called Protecting the Right to Organize, or PRO, Act.

“Contractors need Washington officials to cut tariffs and address the shipping and supply chain problems that are driving costs and contributing to project delays,” said Brian Turmail, the association’s spokesman. “They also expect the President will keep his word and get significant new infrastructure investments enacted as quickly as possible.”