Every year, Marcum surveys the national construction industry. The results reveal key trends in the construction industry today – including some of the biggest issues keeping construction executives up at night – and provide valuable benchmarking for your practice.
In our 2022 report, respondents expressed a cautious optimism, buoyed by the federal infrastructure bill, growing backlogs, and other tailwinds. However, many factors still threaten the industry on a highly competitive landscape.
Despite a healthy and growing backlog that shows companies have much more work than in prior years, construction executives continue to see threats to growth, with securing skilled labor and material costs as the top two cited issues by far.
One notable increase from last year was a 4% year-over-year uptick – to 14% – of respondents who see COVID-19 as the biggest threat to their business. This change could be a response to the macroeconomic risk posed by the pandemic, as evidenced by the severe lockdowns in China in early 2022 and the subsequent significant effect on global supply chains.
As labor costs continue to increase and skilled labor remains a precious commodity, construction companies are attacking the problem with multiple tactics, starting with compensation. A whopping 95% of respondents have increased pay. Of those increasing pay, 67% reported raises of 4% or higher, with 13% increasing compensation by more than 8%.
As labor costs increase and skilled labor becomes a precious commodity, construction companies are attacking the problem with multiple tactics, starting with compensation. A whopping 95 of respondents have increased pay. Of those increasing pay, 67% offered raises of 4% or higher, and 13% increased compensation by more than 8%.
For more information on how contractors are compensating workers, check out our PAS Contractor Compensation Quarterly.
Competition is on the rise in the construction industry. This is somewhat surprising given the high demand for construction work, but what we’re seeing is that while smaller contractors are being selective, large companies are going after just about every job.
Construction opportunities seem to be on [the] rise but there seems to be more competition than five years ago. It’s been [a] bit challenging to obtain projects due to the competition.
Unsurprisingly, materials price volatility remained the #1 issue for construction company executives, followed by healthcare and insurance costs, which also mirror the prior year’s findings. Workers’ compensation issues jumped to #3, edging out income taxes.
Our greatest challenge is to manage our profit with optimum tax savings.
Although pandemic resources like the Paycheck Protection Program have ended, ongoing historically low interest rates in 2021 and underlying macroeconomic strength meant finances remained solid among construction companies. While construction activity is returning to pre-pandemic levels, the costs of doing business are skyrocketing, with breathtaking price increases for certain materials, rising labor costs, and general inflation taking a toll on the bottom line.
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