GlobalData’s Construction Project Momentum Index (CPMI) provides an assessment of the health of the construction project pipeline at all stages of development from announcement through to completion. The CPMI reflects the pace of change in projects as they progress through stages prior to the start of construction, as well as charting the course of progress for projects in the execution phase. For every project that is updated, scores are assigned that reflect the extent to which the latest development is positive, negative or neutral, within a range of -5 to +5. These scores are then weighted by the relative value of the project to the respective country’s overall project pipeline value to generate an overall momentum index score. The adjusted scores are a moving average of four quarters, providing a general trend of momentum.
Based on the latest project updates in April 2020, global construction momentum has remained in negative territory, with the Global CPMI score (unadjusted) dropping to -0.13, from 0.03 in March and an average (unadjusted) of 0.22 in Q1 2020. The trend reflects the severity of the impact of the Covid-19 outbreak on construction projects. This has taken the form of a direct impact on projects being halted and significantly delayed because of lockdown measures or other restrictions on operations. It also reflects disruption in the pre-execution stages, such as delays in tendering and the issuing of contract awards, or projects in early stages being postponed or cancelled. In April, for projects in execution the global average project momentum score dropped to -0.13, while for projects in pre-execution stages it stood at -0.05.
The general slowdown in project momentum has been recorded across all major regions. The Covid-19 outbreak accelerated across Europe in March and April, and widespread travel restrictions and nationwide lockdowns have resulted in a sharp slowdown in construction activity. Although the construction industry has still been permitted to operate in many markets, contractors have been closing down sites given the challenges faced in adhering to guidelines on social distancing. In Western Europe as a whole, the project momentum index dropped to close to -0.58 in April from -0.19 in March. The sharpest declines in CPMI scores have been in Italy and France, followed by the UK. Eastern Europe has also recorded a worsening in the CPMI score, but in April it was still positive.
The construction industry in Latin America had already been struggling amid economic weakness, political instability and corruption scandals, but with the containment measures imposed to curtail the spread of Covid-19 along with the general impact on investment stemming from the decline in commodity prices, the CPMI score remains negative, at -0.44 in April, unchanged from March. Conversely, in North America, project momentum has remained positive, albeit following a decelerating trend.
Although there was a slight improvement in project momentum in the Middle East and North Africa in April, the trend is one of deceleration, with the major oil-producing markets facing troubling times in the wake of the sharp drop in crude oil prices, and a range of lockdowns in place. In Sub-Saharan Africa, the CPMI score has stayed in negative territory, albeit at relatively low levels.
The CPMI score for China has remained positive, but there has been a marked slowdown, from the high levels recorded prior to the Covid-19 crisis. Construction work, particularly on large infrastructure projects, is getting back on track, and this is reflected in still positive CPMI scores for projects in execution, but this has been offset partly by a more negative trend in pre-execution stages. The strict lockdowns in India have contributed to the steep drop in the CPMI in South Asia, while in South-East Asia the disruption to projects in execution and also weaker economic outlooks have contributed to the negative CPMI outturn in April for the region. Meanwhile, in Australasia there has been a mixed performance in recent months, with an acceleration in public projects being offset by disruption and weakness on the private side.