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Project Stress Index setting new highs entering the final weeks of 2023
Earlier this week ConstructConnect released its latest results from the Project Stress Index which measures project stress conditions for those projects still in their pre-construction phase. The last two weeks of readings have seen back-to-back 3-year highs. At present, the composite’s results indicate that stress conditions are 30% higher than they were in 2021. The principal factors underlying the latest results are unseasonably elevated levels of abandoned projects followed more recently by an increase in on hold projects. Of the three forms of project stress tracked by the index, abandoned and on hold projects constitute the two most severe forms of project stress.
A closer examination of abandoned and on hold data points almost exclusively to challenges facing the private sector. During only a brief period in October did public sector projects experience an unusual increase in abandoned and on hold activity. However, by the beginning of November those readings had already fully abated with recent readings once again at historic norms.
Although abandoned projects are considered a most severe form of project stress than occurrences of projects placed on hold, for the second time this year the direction and amplitude of ConstructConnect’s abandoned activity index appears to be leading on hold activity. If this lead-lag relationship is sustained in the near-term it could mean that early 2024 results will see a further rise in the number of projects placed on hold even if abandonment readings should begin normalizing in the immediate future. In short, 2023’s the more austere market and financial conditions are almost certainly to spill over into at least the early part of 2024.
