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Overview of impacts of COVID19 on Construction Project Budgets

September 14, 2023
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Even the Mona Lisa protects against COVID

As the worldwide pandemic unfolded back in Q1 of last year, there were many concerns about how this would impact (among many other things) the construction industry, and in particular, ongoing construction project activities (and on construction project budgets.)  It is interesting to look back almost a year out from that onset, and to look at data quantifying both the impacts in 2020, and the current state of construction projects.  The Rider Levett Bucknall Global Impact Study on Construction Impacts collects data from 48 RLB offices around the globe.  Some of the key findings are:

  • Despite impacts of COVID-19, construction project costs rose just 2.03% in the US (comparing October of 2020 to the same month in 2019.)
  • These cost increases were widespread, ranging from -1.29% in Chicago (the only decrease) to 4.41% in Los Angeles.  (Denver market construction costs increased 1.83%.)
  • 88% reported reductions in productivity less than 20%.
  • 85% of respondents indicated that less than 10% of construction sites are still closed, for any reason.
  • There are anecdotal responses that any remaining site closures are unrelated to government-mandated restrictions.
  • Projects that have restarted, have started off slower than normal:  Around 70% report that up to 30% of projects are held at pre-construction stage.
  • Small to mid-sized companies are generally more satisfied with government interventions to support the industry.  Two-thirds of these businesses felt that government assistance has been at least “reasonably supportive”
  • It is no surprise that Hotel & Hospitality and Retail have been the most impacted sectors.  However, a few sectors, including Data Centers, Infrastructure, and Healthcare, have remained strong.