April 6, 2020

COVID-19 Impact on Construction Companies

The wide-reaching impact of the Coronavirus (COVID-19) emergency has left many Atlanta businesses shut down or operating under a vastly different business model. The convergence of stay at home and forced business closures have left many dealing with never before seen circumstances. While there are certain essential businesses exempt from these orders, the significant increase in state unemployment claims reflects the difficult decisions being made. In the construction industry where finding skilled labor has been a persistent issue for years, it appears the disruptions are also taking a toll. According to the Associated General Contractors (ACG) Coronavirus Survey Results, construction employment has reduced by 29,000. This sharp decrease reflects the changing and volatile nature of the economy and impact on current and future construction projects. To help clients, prospects, and others, Wilson Lewis has provided a summary of key survey findings below.

Key Survey Insights

• Government Project Delays – To assess whether there has been a change in demand for current or upcoming projects, participants were asked about delay or cancellation notifications. According to the survey, 74% of respondents indicated there are no delays, 16% identified delays from state agencies, 11% from city or county government and 3% from federal agencies. It appears the demand from government projects has dropped requiring companies to redeploy resources to other projects.
• Private Project Delays – To understand how private sector demand is changing, participants were also asked about changes in demand for current or upcoming projects. According to the survey, 53% indicated projects have been delayed, 45% no changes and 7% are facing project cancellation. In sharp contrast to government agencies, it appears the changes to private sector projects is going to significantly impact construction companies.
• Project Delays/Disruptions – Participants were also asked to identify the frequency of delays caused by labor or supply chain issues. According to the survey, 35% experienced issues due to lack of materials, equipment, and parts, 28% a shortage of craft workers, 16% lack of government action or workers, 18% notice that an infected worker has contaminated a job site and 41% experienced no delays or disruptions.
• New Projects – In a time of confusion comes opportunity. Participants were asked about whether they are working on new projects related to the COVID-19 emergency. According to the survey, 9% are working on medical projects including hospital remodels and testing facilities, 2% on other building projects, 2% on highway construction projects and 3% on other projects. In stark contrast, 87% indicated no new projects related to the emergency have been scheduled.
• Headcount Changes – Given the changes in demand, participants were asked whether they have increased or decreased employee headcount. According to the survey, 66% have added office workers, 27% job site workers, 16% furloughed or terminated office workers, 3% have furloughed or terminated job site workers and 1% reported no changes in headcount.
• SBA Loan Opportunities – To counteract these changes many businesses are considering applying for the Paycheck Protection Program or Economic Injury Disaster Loans (EIDL) available through the Small Business Administration (SBA). Participants were asked about whether they are going to apply through these programs. According to the survey, 41% don’t know or need more information about the program, 24% are not eligible or not interested, 2% were not aware of the program and 33% are going to apply. Given the favorable terms and conditions of these programs, it’s important to consider these programs if needed.

Contact Us

Since the survey was conducted at the end of March, it’s expected for these numbers to change as the COVID-19 emergency continues. The survey findings provide interesting insights into how industry companies will be impacted in the coming months. If you have questions about the information outlined above or need assistance with a tax analysis or other issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.