Back in December 2018, Peggy Smedley saw it coming and conducted interviews with industry experts to determine what’s lurking beyond 2019. Back then you might remember the economic outlook for construction was the strongest it had been in years—but she so aptly asked: How long will we ride the current economic wave? Now, many of the economists and analysts have pointed to 2020 as the year there would be a slowdown in work.

Now, naturally, they likely didn’t see a global pandemic as one of the factors leading to a downturn. So now that we are more than half a year into this pandemic, what is the forecast for projects in the months ahead? And can technology help fill in some of the gaps?

Back at the end of October, the AGC (Associated General Contractors of America) released results from a survey and analysis of new government data that points to a slowdown ahead. The results show that 75% of survey respondents report having a scheduled project postponed or canceled. Here is the shocking part: That number is up from the 60% of contractors who reported a canceled project in the August survey. We are trending in the wrong direction.

The virus is also already disrupting projects that are already underway, according to Ken Simonson, chief economist, AGC, with 78% reporting they are currently experiencing project delays or disruptions, which is up from 57% in June. These disruptions come from many factors: 42% report it is due to a shortage of construction materials or equipment, while 35% report it is because of a shortage of craftworkers or subcontractors.

Preparing our future workforce is a topic that will be a big part of the agenda at the hybrid, virtual and in person, Constructech Technology Days 2020 event, which will take part later this week on November 12-13. We are facing a skills gap in construction that will require us to shift the way we work—including looking for a more diverse group of workers and transferring our skills from our seasoned professionals to those just entering the field. The younger generation is more socially engaged and has brought more racial and ethnic diversity to American society.

Another economic trend to keep an eye on is the rapidly accelerating costs associated with slow payments in the construction industry. Based on a survey conducted by Rabbet in September 2020, general contractors and subcontractors estimate the cost of floating payments for wages and invoices represents $100 billion in excess cost to the industry, a 56% increase from the cost reported in 2019.

Findings indicate those costs are passed on to real estate developers and financiers in the form of project delays and higher bids from contractors. Further, 25% of all respondents reported that work has been delayed or stopped due to a delay in payments to crew members in the last 12 months.

There are opportunities in all of this though. Roughly 70% of real estate developers and construction lenders reported seeing room for improvement regarding the efficiency of their construction finance processes.

As we have been saying here at Constructech for years, a slowdown is a good time to ramp up technology initiatives to help fill in the gaps with the skilled worker shortage and more. Now, with the pandemic, the industry is ripe for digital transformation to improve efficiencies in construction. We shall see what the next few months—and years—will bring.

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