Moody’s: Expect More Coronavirus-Induced Project Delays
Date Posted: June 2, 2020
Posted In: COVID-19 UPDATES, Discussion, News,
From ConstructionDive: Some types of construction projects historically have been prone to delays, and thanks to the COVID-19 pandemic, those delays are about to get worse, according to a Moody’s Analytics REIS analysis.
In its report, Moody’s said that 82% of the multifamily projects that started construction between 2002 and 2019 were completed (secured a certificate of occupancy and started leasing) at least one month behind schedule. During that same period, the average completion date for multifamily developments was a little more than four months late, with only 18% finishing early (15%) or on time (3%).
Other types of projects did a little better from 2002 to 2019. Industrial projects finished an average of almost four months behind schedule, while office projects finished an average of almost three months late and retail project timelines fell almost two months behind. More industrial projects (40%) than any other project type were completed on time, with office (11%) and retail (6%) projects, respectively, a distant third and fourth.
So, why did these projects fall behind? According to the report, there were many factors:
- Weather issues
- Supply chain disruptions
- Strict regulations and building codes
- Inadequate supply of skilled workers
- Disagreements between the project team about design, specifications, materials and costs
- Other causes
The Great Recession, which started in late 2007, also played havoc with construction schedules as workers were laid off and banks tighten their lending restrictions.
And then the coronavirus spread
The Moody’s analysis says the spread of the coronavirus has deal the construction industry many blows. First, unlike the kinds of recessions the U.S. has seen before, this economic body slam was caused by mandatory government shutdowns, not by an out-of-control real estate market or another financial implosion.