How did your construction company do in 2020?
By Jenny LescohierMarch 30, 2021
Construction suffered double-digit declines in pending projects, contract values and hiring in 2020, thanks in large part to the effects of the Covid-19 pandemic, but when taking in the big picture, the view is not all bad for the industry.
According to the Quarterly Construction Metrics Index released by construction accounting and project management software provider Viewpoint, hiring was down 30% year over year, as were pending projects, while contract values declined 25%.
The numbers appear severe, but it’s important to note that 2019 was a banner year for construction, with hiring up 13% compared to 2018. Overall projects were down only 5% compared to 2019. In contrast, 2019 saw a 16% increase in projects as compared to 2018.
Much of the declines can be attributed to the effects of Covid-19 on construction, however, Anne Hunt, director of data and analytics at Viewpoint, said things are slowly picking up, but it’s an uphill battle that requires more analysis than ever before.
“We still see some hesitation in the market,” she said. “Our data scientists did some forecasting on the hiring trends of 2021, and it still looks like the projections are going to be lower and down a bit.
“We need projects to employ new people,” she added, noting, “Projects are starting to rebound in 2021, we’re seeing a surplus of backlog again across the board, particularly for general contractors.”
While hiring was down throughout 2020 for heavy highway and general contractors, specialty contractors maintained net positive employment throughout the year, including in the fourth quarter, which saw a +.7% gain. This could be attributed to their ability to do projects backlogged by general contractors and/or routine service/maintenance
work, the report indicated.
Regionally, the most notable change was in the Northeast, which experienced a sharp decline in March of 2020 and then rebounded throughout the rest of the year as the region adapted to the pandemic and it spread to other areas of the country.
As the Northeast recovered, most of the rest of the country experienced negative hiring growth as the pandemic disrupted business, particularly in the Plains, Midwest and Southeast regions.
With the exception of the Northeast, all regions saw negative net hiring in the fourth quarter.
Going forward, Hunt said some areas are seeing things pick up faster than others. “Texas and the southern states are coming back pretty quickly, while New York and the Pacific coast are a bit slower,” Hunt noted. “Some of that has to do with where [Covid] restrictions are more strict. Texas, for example, has opened up more quickly and now they can’t
keep up with staffing.”
Year-over-year, the report said pending projects were down 38% for specialty contractors, 30% for general contractors, and 25% for heavy highway.
The decline in pending projects began in Q1 2020, even before the pandemic hit the U.S. While projects typically rebound in the spring and early fall, they stayed well below average in 2020. The trend continued into the third and fourth quarter, which saw lower-than-average pending and closed projects, equating to a year-over-year decline of 31%.
Overall projects were down just 5% over 2019, which was up 16% over 2018.
Contract values were down year-over-year by 25%, which mirrors the declines seen in hiring and project starts.
General contractors saw a 50% drop in the fourth quarter, contributing to an overall year-over-year decline of 36% in
contract value. Heavy highway contract values were down 15% in Q4, for a year-over-year decline of 30%. Specialty contract values were down 18% for the fourth quarter and 18% year over year.
“Historical data is so powerful; looking at what you’ve done in the past and how it’s performing. It can be a really good benchmark when looking at how to approach your next project,” Hunt said. “Good data gives contractors across North America a better sense of how the industry is doing and how they compare on key metrics.”
Viewpoint will release a Quarterly Construction Metrics Index following each quarter in 2021.
The latest report was aggregated from anonymized, real-time data entered into Viewpoint’s construction management suite. Sourced from roughly 1,000 Viewpoint customers who collectively managed over $76 billion dollars worth of construction projects in 2020, the Index examined data related to job creation, project stats and contract values.