The insurance company Nationwide recently conducted an online survey with 200 middle-market construction companies — defined as those with 25-500 employees, $10 million-$500 million in revenue or 20-plus fleet vehicles — about how they were affected by the COVID-19 pandemic and their outlook for 2021.
According to the survey, construction owners believe the economy and their company’s performance will increasingly improve over the next year:
- In the next six months, 48% believe the economy will improve and 67% believe their revenue will improve.
- In the next 12 months, 60% believe the economy will improve and 75% believe their revenue will improve.
How Construction Companies were Affected by COVID-19
The survey put into perspective the impact of the pandemic on construction companies in 2020. The survey found:
- 70% of construction owners were negatively impacted by the pandemic, experiencing the biggest hits to total revenue (52%), their company’s ability to bid on new projects (45%) and their workforce/employee headcount (37%).
- The pandemic also emphasized the need for increased planning, as more than 1-in-5 business owners lacked plans to help their businesses operate through economic uncertainty:
- 27% didn’t have proper plans in place to successfully navigate project site shutdowns/re-openings.
- 24% didn’t have a business plan to account for a potential recession.
- 23% didn’t have enough employees or subcontractors to meet project demand.
The pandemic has changed the way many construction companies do business, to improve continuity and efficiency. Workforce shortages also led to business changes. According to the survey, the tightening labor market has also forced them to relax screening criteria for new hires. The study showed that 70% of business owners said they have, will or may relax new hire screening criteria and drug testing practices to account for a lack of qualified candidates.
“COVID-19’s impacts have brought new and existing challenges to the forefront for many construction business owners,” says Linda Stueber, Nationwide’s senior vice president of middle market commercial lines.
Many construction owners added new technology to their businesses during 2020. The study showed:
- 92% of owners reported investing in technology within the past year to meet clients needs, and 87% said it was to increase the efficiency of operations.
- 4 in 10 owners reported that their business uses cloud computing, IoT, BIM systems and vehicle telematics.
- 48% use cloud computing
- 43% use Internet of Things (IoT)
- 42% Building Information Management (BIM) systems
- 41% vehicle telematics
- 80% of those owners believe telematics plays a critical role in their business’ operations.
Among the construction owners that use vehicle telematics, their company uses telematics for:
- 70% track the overall vehicle runtime or mileage.
- 67% evaluate employee driving behavior.
- 64% use telematics data to save on fuel costs.
While optimistic for the long-term, many survey respondents were worried about the first few quarters of 2021.
The study showed that 79% are worried about meeting their 2021 revenue goals and 76% fear lower customer demand due to an economic recession. Despite their concerns, however, 84% of owners are optimistic about the strength of the 2021 upcoming peak season and their business’s preparation to meet increased demand.
The survey took place between Jan. 5-14, 2021 as part of Nationwide's ongoing Agent Authority research series.