Construction Execs Share Sunny Outlook for 2022

Nearly 60% of those surveyed by accounting firm Marcum in a recent poll of the construction industry say they expect more opportunity in the future, an increase over last year’s 54%.

Marcum’s annual national construction survey reveals that contractors are buoyed by the federal infrastructure bill and growing backlogs, with 69% saying the former will have a positive financial impact for their businesses. And nearly half are reporting higher backlogs than in 2021. 

“Broadly speaking, the construction industry is finally returning to pre-pandemic levels of activity but is still being hampered by three familiar challenges—labor shortages, material costs and availability, and supply chain issues,” said Marcum Partner Roger Gingerich, who leads the firm’s Midwest construction practice. “Most respondents are positioning for growth and looking for ways to thrive in a very dynamic space. This includes an uptick in joint ventures, something we think makes sense given the difficulties in securing skilled labor and materials in a sector where there is both high demand and deep competition.”

The top concern for construction execs remains volatility in materials prices, followed by healthcare and insurance costs and workers’ compensation issues. Eighty-nine percent reported being delayed by materials shortages, labor shortages, or both. A whopping 95% increased pay to combat labor shortages, with 13% of those increasing comp by more than 8%.

“Our greatest challenge is being able to hire qualified individuals at a rate that is sustainable for the long term,” one exec told Marcum as part of the survey. “We interview a lot of individuals with limited experience that have salary expectations way beyond their qualifications. This is a challenge because we need good, qualified individuals, but we also need the pay rates to be sustainable for long-term company growth.”

Twenty-seven percent of respondents say they are filling skills gaps when they bid for jobs by forming or considering joint ventures with complementary companies, while others are implementing programs with local trade schools.

Marcum also reported that 60% of respondents say general and administrative overhead expenses were higher this year than last, with 55% budgeting for further increases this year.

Finances were also reported as solid, with the majority saying their access to capital was the same or improved. Forty percent of companies are also restructuring for growth, with 23% of those saying they are seeking M&A opportunities. 

But “the Great Recession of 2008 provides a cautionary tale about sticking to your knitting,” the report notes. “Diversifying is great, but in construction it must be done carefully. Ensure you’re partnering with people who really know what they’re doing because in this increasingly specialized space, it’s only possible to do a handful of things really well.”