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
Market Data | Jul 20, 2020
Construction employment rises from May to June in 31 states, slips in 18
Recent data from Procore on jobsite workers’ hours indicates employment may have leveled off.
Market Data | Jul 20, 2020
6 must reads for the AEC industry today: July 20, 2020
Never waste a crisis and robotic parking systems help developers optimize parking amenities.
Market Data | Jul 17, 2020
7 must reads for the AEC industry today: July 17, 2020
Kennedy Middle School's new Administration/Family Center and Tips to make optimal use of salvaged materials.
Market Data | Jul 16, 2020
Final NEPA rule will make it easier to rebuild infrastructure, reinvigorate the economy, and continue protecting the environment
Administration’s final reforms to the federal environmental review process fix problems with prior process, maintain environmental rigor, and accelerate needed infrastructure improvements.
Market Data | Jul 16, 2020
5 must reads for the AEC industry today: July 16, 2020
1928 hotel reimagined as a new resiential and cultural hub and Walgreens plans hundreds of doctor's offices at its stores.
Market Data | Jul 10, 2020
5 must reads for the AEC industry today: July 10, 2020
The world's tallest hybrid timber tower and the Florida Gators have a new $65 million ballpark.
Market Data | Jul 9, 2020
6 must reads for the AEC industry today: July 9, 2020
The world's most sustainable furniture factory and what will construction look like when COVID-19 ends?
Market Data | Jul 8, 2020
North America’s construction output to fall by 6.5% in 2020, says GlobalData
Even though all construction activities have been allowed to continue in most parts of the US and Canada since the start of the COVID-19 pandemic, many projects in the bidding or final planning stages have been delayed or canceled.
Market Data | Jul 8, 2020
5 must reads for the AEC industry today: July 8, 2020
AEMSEN develops concept for sustainable urban living and nonresidential construction has recovered 56% of jobs lost since March.
Market Data | Jul 7, 2020
Nonresidential construction has recovered 56% of jobs lost since March employment report
Nonresidential construction employment added 74,700 jobs on net in June.