California contractors face project delays, other pandemic challenges – Daily News
A year after the COVID-19 outbreak, California contractors are still grappling with rising material costs, supply chain issues, and project delays or cancellations related to the pandemic, a new report shows.
The Associated General Contractors of America survey was conducted February 19 through March 4.
Keith Choison, president of Keith’s Construction & Painting Co. in Anaheim, said his business had slowed because the health crisis hit customers economically.
“Some projects that we had planned have been delayed,” he said. “If a company isn’t making a profit … they have to let people go.”
When asked if there were any project delays or disruptions, the contractors surveyed said they did and linked the problems to a variety of factors.
Forty-eight percent reported a lack of building materials, equipment, or parts; 39% reported a potentially infected person visiting a construction site and 30% attributed the disruption to a lack of subcontractors.
The survey shows that 77% of contractors have been forced to postpone or cancel projects that were scheduled to start in 2020 or 2021. (Photo by Sarah Reingewirtz, Los Angeles Daily News / SCNG)
The survey shows that 77% of contractors have been forced to postpone or cancel projects that were scheduled to start in 2020 or 2021.
Regarding the delay in the procurement of materials, equipment or parts, respondents pointed to backlogs or stoppages in domestic factories, mills and processors (85%), backlogs or stoppages at foreign manufacturers (60%), delays in ports (40%) ) and delays on the railways or in the transport from ports to delivery points (28%).
Eighty percent said they would pay more for materials, parts and accessories, while 41 percent indicated higher transportation and delivery costs. Others pointed to higher prices for subcontracting, insurance and equipment rentals and purchases.
“The survey results make it clear that the construction industry is facing a multitude of challenges that threaten to leave many companies and workers behind,” said Ken Simonson, the association’s chief economist. “The pandemic has left the supply chain in ruins for a number of key components and undermined demand for a wide variety of private sector projects.”
According to Simonson, 93% of respondents said the pandemic drove up costs.
Four in five spend more on personal protective equipment, disinfectants, and other health-related expenses, and more than half say projects take longer to complete.
Almost half (46%) of the contractors surveyed said they had fewer staff than in the previous year due to the pandemic. Another 33% said no change and 21% said they would add employees.
Despite the challenges, contractors of all project types and sizes are optimistic about hiring expectations for the next 12 months, the report said. About three in five respondents expect more workers to be hired in the coming year, and only 10% to 15% expect layoffs.