Marcum Releases 2nd Annual National Construction Survey – Findings Highlight Optimism in the Construction Industry
New York City, NY – Marcum LLP today released its second annual survey of the national construction industry. Survey responses highlight the construction industry’s comeback, with optimism on the rise as GDP climbs and unemployment drops.
The Marcum National Construction Survey covers a range of topics, from top priorities to problems, strategies, possible solutions, and the effects of the pandemic. This year’s study—conducted in the spring as the pandemic began showing signs of receding in the U.S.—revealed a marked uptick in outlook by construction leaders as compared to the 2020 survey, which was fielded in the throes of the coronavirus crisis.
While backlog hasn’t returned to pre-pandemic levels for most companies, many executives said it is improving. Twenty-nine percent said their backlogs would be higher at the beginning of 2021 than in the same period of 2020. Nearly a third (32%) of respondents said the average size job they bid on in the prior 12 months had increased. More than half (54%) anticipate more opportunities in their regions in the next three years, and 43 percent expect more opportunities outside their regions.
“Survival may have been sufficient at the height of the pandemic, but growth, not just getting by, is the goal for many construction companies today. Even with the challenges of increased competition, climbing material prices and labor shortages, construction is seeing opportunity with pent-up demand and infrastructure investments,” said Joseph Natarelli, national leader of Marcum’s Construction Services practice and office managing partner in New Haven, CT.
Company priorities shifted as the pandemic began to wane and the economy reopened, with seven categories ranked lower by respondents this year, although typically by only a few points. The top three priorities cited for 2021 include strategic planning (57%), finding solutions for skilled labor shortages (41%) and seeking new markets/organizational planning (both with 39%).
Only 1 in 10 cited the pandemic as a top threat to their business. Traditional issues dominated as construction leaders’ top concerns.
Securing skilled labor again led the list of threats, but the level of concern dropped from 34 percent of respondents in 2020 to 26 percent this year. Inversely, concerns about lack of work and material costs edged up in this year’s survey—22% versus 19% in 2020 and 12% versus 5%, respectively.
“Labor and material costs are the blocking and tackling of the construction industry. The industry faces challenges with both as material prices spike and labor shortages remain. Finding skilled labor, managing price volatility, and mitigating the risks that come with rising costs are top priorities for many respondents. There is also more concern over lack of work, which has not been a prevalent issue for contractors since the post-2008 recession,” Mr. Natarelli said.
The 2021 survey also queried respondents about their use of Payment Protection Program (PPP) loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Thirty-two percent of those who received PPP funding said their loans were forgiven, and an additional 24 percent said their forgiveness applications were pending. Thirty-seven percent said they planned to apply for the second round of PPP funding, 13 percent said they would not apply, and 40 percent said they were not eligible.
“Adaptations made during the pandemic could have positive impacts in some respects. E-commerce is likely to remain robust, leading to increased warehouse demands. Ongoing negotiation on Capitol Hill about new infrastructure funding is likely to lead to some action. More than a year after the pandemic began, the construction industry, which was declared essential, is emerging to find pent-up demand — and that could help relieve some executives’ concerns over lack of work,” said Roger Gingerich, a Marcum tax partner and leader of the Firm’s Midwest Real Estate and Construction group.
About Marcum Construction Services
One of the leading construction accounting firms in the U.S., Marcum LLP’s Construction Services group provides audit, consulting, and taxation services to clients ranging from start-ups to multi-billion-dollar enterprises. The group’s professionals, among the country’s foremost experts in construction accounting, are frequent industry authors and speakers and serve as technical reviewers for the AICPA’s construction audit and taxation guides. Marcum’s construction group also publishes several definitive industry resources – including the annual Marcum National Construction Survey, the quarterly Marcum Commercial Construction Index, the Marcum PAS Contractor Compensation Quarterly, and the annual Marcum JOLTS Analysis of construction employment trends – and presents an ongoing series of industry summits and technical webinars focused on the unique needs of construction contractors.
About Marcum LLP
Marcum LLP is a top-ranked national accounting and advisory firm dedicated to helping entrepreneurial, middle-market companies and high net worth individuals achieve their goals. Marcum’s industry-focused practices offer deep insight and specialized services to privately held and publicly registered companies, and nonprofit and social sector organizations. Through the Marcum Group, the Firm also provides a full complement of technology, wealth management, and executive search and staffing services. Headquartered in New York City, Marcum has offices in major business markets across the U.S. and select international locations. #AskMarcum.