Rise in Construction Project Cancellations Felt Across the Country

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In mid-March, the Associated General Contractors of America released a survey reporting that more than one-quarter of contractors had at least one project shut down by government officials due to the coronavirus pandemic. Less than two weeks later the AGC published another survey, this time showing the number of projects cancelled by project owners.

According to the survey results, 39 percent of contractors reported project owners asking them to delay or halt work.

“The abrupt plunge in economic activity is taking a swift and severe toll on construction,” said Ken Simonson, the AGC’s chief economist. “The sudden drop in demand stands in sharp contrast to the strong employment levels this industry was experiencing just a few weeks ago.”

The construction industry in the United States has seen a steady rate of job growth over the last year, and at one point last fall single-family homes were being built at the highest rate since the 2007 recession. Now that growth may be wiped out by the wave of complications and cancellations created by the coronavirus.

An industry that added jobs in 42 of 50 states over the last year may soon not have enough work to go around. Just eight percent of firms reported taking on additional work as a result of the pandemic, mainly from hospital expansion and the remodeling and construction of clinics, labs and screening facilities.

And projects are not the only things complicated by the pandemic. The latest AGC survey also asked contractors about delayed or cancelled deliveries from their suppliers. Thirty-five percent reported such issues, a sharp jump from the 22 percent who reported delivery delays in the earlier mid-March survey.

Twenty-three percent of contractors said supply disruptions caused them to delay work on a project. Additionally, 13 percent of contractors reported shutting down a project due to “any information to the effect that an infected individual has entered a job site and at least potentially infected it.”

While it is hard to say what the long-lasting impact of this unprecedented pandemic will look like on a national and global scale, the short-term effects are already being felt.

“The steps firms are taking to protect workers from the coronavirus unfortunately won’t be enough to save many of them from the economic damage the pandemic is creating,” said Stephen Sandherr, the AGC’s chief executive officer. “Construction workers and employers need more than a lifeline, they need a recovery plan.” Find out why home sales are being cancelled.