Contractors continue to face serious challenges year into pandemic

Construction firms are experiencing soaring materials costs, widespread supply chain problems, and continuing project deferrals and cancellations, according to a new survey  the Associated General Contractors of America (AGC) released Thursday.

AGC officials urge Congress and the Biden administration to take steps to eliminate tariffs on key materials, address shipping backups, and boost funding for new infrastructure to help the industry recovery.

“The survey results make it clear that the construction industry faces a variety of challenges that threaten to leave many firms and workers behind, even as some parts of the economy are recovering or even thriving,” says Ken Simonson, the association’s chief economist. “The pandemic has left the supply chain for a range of key construction components in tatters and undermined demand for a host of private-sector projects.”

Simonson notes that 93 percent of AGC survey respondents report the pandemic drove up their costs. Four out of five are spending more on personal protective equipment, sanitizers and other health-related expenses. More than half say projects are taking longer than previously.

Costs and delayed deliveries of materials, parts and supplies are vexing many contractors, AGC adds. Nearly 85 percent report that those costs have increased over the last year.

Other takeaways

In addition, nearly three-fourths of the firms AGC surveyed are experiencing project delays and disruptions, mainly due to shortages of materials, equipment or parts.

More than three-fourths of firms report having projects canceled or postponed in the past year – including more than one out of five with a 2021 project that was canceled or postponed. Meanwhile, one out of five AGC survey respondents say they’ve won new projects or add-ons to existing projects as a result of the pandemic.

In a sign that the pandemic has had very different effects on construction firms, about one-third of firms say business matches or exceeds year-ago levels, while another one-third says it will take more than six months to reach that mark.

“Contractors need Washington officials to cut tariffs and address the shipping and supply chain problems that are driving costs and contributing to project delays,” says Brian Turmail, AGC spokesman. “They also expect the president will keep his word and get significant new infrastructure investments enacted as quickly as possible.”