Nearly one-third of architecture, engineering and construction (A/E/C) firms have furloughed or laid off employees due to COVID-19, and more than 90% say they have experienced at least some project delays or cancellations, according to a new survey of firm leaders conducted by PSMJ Resources. In general, however, the industry has weathered the crisis better than most. The survey also found that less than 5% of responding firms suffered “significant” staff reductions, and under 15% said that their project delays and cancellations were “major” as opposed to moderate or minor.
The data is from a new monthly supplement to PSMJ’s Quarterly Market Forecast (QMF) survey of A/E/C firms. The QMF, produced quarterly by PSMJ since 2003, measures proposal activity overall and for a variety of markets and submarkets served by A/E/C firms. The August results for proposal opportunities suggest that the bleeding has stopped and the industry’s recovery is well underway. After reaching lows in the 2nd Quarter unseen since the Great Recession, proposal activity rebounded in July and August, overall and across most market sectors.
"The A/E/C Industry has fared much better than most industries during the Covid-19 pandemic. In fact, many firms are reporting their best year ever,” says PSMJ Senior Principal David Burstein, P.E., AECPM. “The Paycheck Protection loan program designed to limit staff reductions has certainly helped keep layoffs down to about 5% of the industry workforce, and hiring has been accelerating for the past three months. At the same time, proposal activity has returned to a level where the number of firms reporting growth in opportunities is equal to or slightly higher than those saying proposal activity is down."
Quarterly Market Forecast Supplement– COVID’s Impact on Layoffs through March vs. August
Earlier data on the effects of COVID, collected by PSMJ as part of its 1st Quarter QMF survey, found that fewer than one of every five firms had conducted layoffs by the end of March, while a percentage of firms that had experienced no project delays or cancellations fell from 12.4% in March to 8.4% in August
Quarterly Market Forecast Supplement– COVID’s Impact on Projects through March vs. August
After bottoming out at -41% in April and -22% for the 2nd Quarter, the QMF’s Net Plus/Minus Index (NPMI) for overall proposal activity improved to +2% in July and stayed relatively level at +1% in August. PSMJ’s NPMI represents the difference between the percentage of firms reporting an increase in proposal activity and those reporting a decrease for the subject period. For August, 33.1% of respondents said they saw increased proposal activity compared with 31.8% who reported a decrease. The remainder said proposal activity was about the same from July to August.
Among the 12 markets measured, healthcare returned to the top spot with an NPMI of +31% after slipping in the 2nd Quarter. It was followed by Energy/Utilities (29%) and a surging Housing market (27%). Water/Wastewater (20%) continues to be solid amid the COVID crisis, while Heavy Industry and Environmental (both 9%) rounded out the Top 6. Education (-29%) remains a troubled market, tied for second-worst with Commercial Developers and trailing only Commercial Users (-36%).
PSMJ has been using the QMF as a measure of the design and construction industry’s health every quarter for the past 17 years, assessing the results overall and across 12 major markets and 58 submarkets. The company chose proposal activity because it represents one of the earliest stages of the project lifecycle. A consistent group of over 300 firm leaders participate, including 155 responding for the August supplement.
Related Stories
Healthcare Facilities | Feb 18, 2021
The Weekly show, Feb 18, 2021: What patients want from healthcare facilities, and Post-COVID retail trends
This week on The Weekly show, BD+C editors speak with AEC industry leaders from JLL and Landini Associates about what patients want from healthcare facilities, based on JLL's recent survey of 4,015 patients, and making online sales work for a retail sector recovery.
Market Data | Feb 17, 2021
Soaring prices and delivery delays for lumber and steel squeeze finances for construction firms already hit by pandemic
Association officials call for removing tariffs on key materials to provide immediate relief for hard-hit contractors and exploring ways to expand long-term capacity for steel, lumber and other materials,
Market Data | Feb 9, 2021
Construction Backlog and contractor optimism rise to start 2021, according to ABC member survey
Despite the monthly uptick, backlog is 0.9 months lower than in January 2020.
Market Data | Feb 9, 2021
USGBC top 10 states for LEED in 2020
The Top 10 States for LEED green building is based on gross square feet of certified space per person using 2010 U.S. Census data and includes commercial and institutional projects certified in 2020.
Market Data | Feb 8, 2021
Construction employment stalls in January with unemployment rate of 9.4%
New measures threaten to undermine recovery.
Market Data | Feb 4, 2021
Construction employment declined in 2020 in majority of metro areas
Houston-The Woodlands-Sugar Land and Brockton-Bridgewater-Easton, Mass. have worst 2020 losses, while Indianapolis-Carmel-Anderson, Ind. and Walla Walla, Wash. register largest gains in industry jobs.
Market Data | Feb 3, 2021
Construction spending diverges in December with slump in private nonresidential sector, mixed public work, and boom in homebuilding
Demand for nonresidential construction and public works will decline amid ongoing pandemic concerns.
Market Data | Feb 1, 2021
The New York City market is back on top and leads the U.S. hotel construction pipeline
New York City has the greatest number of projects under construction with 108 projects/19,439 rooms.
Market Data | Jan 29, 2021
Multifamily housing construction outlook soars in late 2020
Exceeds pre-COVID levels, reaching highest mark since 1st quarter 2018.
Market Data | Jan 29, 2021
The U.S. hotel construction pipeline stands at 5,216 projects/650,222 rooms at year-end 2020
At the end of Q4 ‘20, projects currently under construction stand at 1,487 projects/199,700 rooms.