2020 Marcum Northeast Ohio Construction Survey

2020 MARCUM NORTHEAST OHIO CONSTRUCTION SURVEY

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The number of 2020 respondents who predicted a recession in the next year doubled once the pandemic reached the U.S.

EXECUTIVE SUMMARY

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Marcum is pleased to provide the results of the 13th annual survey of the Northeast Ohio Construction Survey . When Skoda Minotti and Marcum merged in December 2019, we continued to recognize the value of reporting on the health of our region’s construction industry. Marcum also conducted a 2020 national construction survey, which provides us with valuable comparisons. We first conducted this survey during the Great Recession of 2008. Now, in 2020, we find ourselves in a global pandemic, which reached the U.S. in the middle of our survey response period. As a result, we had the rare opportunity to divide respondents into two groups—those who completed the survey before and after March 15. For the purpose of this report, we refer to the latter group as “post-pandemic” respondents. In some instances, there are notable differences in the responses between the two groups, and we provide commentary to call them out. In our final reminders to respondents to complete the survey, we included a question asking which actions companies were taking to mitigate the impact of COVID-19 on their businesses. A resounding 85% of respondents told us they were applying for the Paycheck Protection Program (PPP), which provides forgivable loan assistance for retaining employees and continuing operations. According to the Associated General Contractors (AGC), construction was one of the top three industries receiving PPP loans. Almost half (45%) of respondents were exploring their business interruption insurance for a virus exclusion, and 36% were exploring whether force majeure provisions existed in their contracts. In 2019, respondents remained cautiously optimistic about the Northeast Ohio construction industry, noting some concern about an eventual market correction. While optimism has waned some among respondents since 2015, the industry has remained strong. That’s not to say there aren’t challenges. The lack of skilled construction workers, material cost volatility, and healthcare costs reported one year ago remain top concerns in 2020. The upcoming presidential election has temporarily diminished the focus on skilled labor, though it still looms as a major issue. Post-pandemic respondents revealed

heightened concern about material costs and the availability of bank credit. While 61% of total respondents report their average job size remains the same, the number reporting an increase in job size was the lowest we have seen since 2013. Despite these issues, overall responses reflect optimism about the health of the Northeast Ohio construction industry:  94% of total respondents report the ability to obtain financing over the past year has stayed the same or improved.  Almost three-quarters of respondents expect their project backlog to be the same or higher in 2020.  67% of all respondents report bonding requirements of less than 40% of their projects and only 7% of respondents felt it would be more difficult to obtain bonding in the future.  53% of respondents expect to see more growth opportunities within Northeast Ohio, an 8% increase over 2019 responses. Our 2020 report provides greater insights into contractors’ priorities, perceived threats and challenges now—and in the 12 months ahead. We hope you find this report to be helpful and, as always, we welcome your feedback and questions. Marcum LLP is a premier provider of full-service accounting, tax and consulting services to the construction industry. Our clients range from small contractors to billion-dollar international construction organizations. Our client base gives us the breadth and depth of construction experience to effectively and efficiently develop the strategies needed to meet your requirements. Visit marcumllp.com/construction to learn more. ABOUT OUR CONSTRUCTION INDUSTRY GROUP

TABLE OF CONTENTS

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Executive Summary

Mighty COVID Steps to the Bat

Financial Snapshot

Growth Opportunities

Bonding Considerations During COVID-19

Survey Results

NORTHEAST OHIO CONSTRUCTION INDUSTRY SERVICE LEADERS

ROGER GINGERICH Midwest Construction Group Leader roger.gingerich@marcumllp.com 440.459.5725

MAYFIELD VILLAGE, OHIO MARIE LENARDUZZI marie.lenarduzzi@marcumllp.com 440.459.5788

MAYFIELD VILLAGE, OHIO RANDY BOSLEY randy.bosley@marcumllp.com 440.459.5726 MAYFIELD VILLAGE, OHIO AMY GIBSON amy.gibson@marcumllp.com 440.459.5787

FAIRLAWN, OHIO KYLE ROHRIG kyle.rohrig@marcumllp.com 330.564.8514

FAIRLAWN, OHIO

CHRIS SIVAK christopher.sivak@marcumllp.com 330.564.8540

marcumllp.com

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