Architecture Firm Billings Plummet Due to COVID-19 Pandemic

Industry News / Market Forecast

April 23, 2020

Architecture Firm Billings Plummet Due to COVID-19 Pandemic

Billings at architecture firms plummeted in March as the Architecture Billings Index (ABI) fell by 20.1 points to a score of 33.3 (a score over 50 indicates increasing billings, a score below 50 indicates declining billings).

The drop is by far the largest single-month decline in the nearly 25-year history of the index, far surpassing the declines of 9.4 points at the start of the 2001 recession and 8.3 points at the start of the Great Recession, reflecting how quickly and fundamentally business conditions have changed across the country and around the world in the last month as a result of the COVID-19 pandemic.

Indicators of future work also declined at a staggering rate in March. Inquiries into new projects fell particularly low, and firms reported a sharp decline in their backlogs, from a near-record high of 6.3 months at the start of the year to an average of 5.0 months at the end of the first quarter.  

Firms specializing in the commercial/industrial sector reported the softest conditions, due to the uncertainty over prospects for the hospitality and retail sectors. Billings declined the least at firms with an institutional specialization, with some actually reported a modest uptick in work due to increased demand for healthcare facilities. And some firms reported that school projects are getting underway early because many schools are shuttered for the rest of the academic year.

In the special survey of ABI panelists that was conducted in mid-March, 94 percent of responding firms indicated that they expect revenue to decline in the second quarter (April-June, with more than one third of anticipating losses of 25 percent or more. On average, architecture firms expect revenue losses of 17 percent during the quarter.

To manage these losses, 53 percent of the responding firms have implemented a hiring freeze, 32 percent have frozen staff salaries, 13 percent have cut staff, 12 percent have reduced salaries,10 percent have implemented staff furloughs, and 8 percent have converted some or all positions from full-time to part-time.

Looking ahead, 53 percent of responding firms believe the impact of the downturn on their firm will be significant but manageable, while 36 percent predict it will have a serious to devastating impact.

Click here to view the March ABI

 

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