A recently released study shows a marked uptick in construction leaders’ optimism and outlook compared to the same study conducted the previous year during the heart of the coronavirus crisis. The second annual Marcum National Construction Survey, conducted in Spring 2021, saw growing optimism among respondents as the economic outlook continued to improve and prospects for long-term growth increased.
The second annual survey, conducted by Marcum LLP, covers a range of topics, from top priorities to problems, strategies, possible solutions and the effects of the pandemic. Results showed a marked increase in confidence among industry leaders as the impacts of the pandemic in the U.S. showed signs of receding.
While construction executives responding to the survey stated backlogs remained below pre-pandemic levels, 29% said they were higher at the start of 2021 than in the same period in 2020. In addition, nearly a third (32%) noted the average size job they bid on in the prior 12 months had increased. Optimism for future construction activity was also relatively strong, with more than half (54%) of respondents expecting increased opportunities in their regions in the next three years and 43% foreseeing more opportunities outside their regions.
For 2021, the focus for industry leaders has shifted from survival mode during the peak of the pandemic to growth mode, said Joseph Natarelli, national leader of Marcum’s Construction Services practice and office managing partner in New Haven, CT. “Even with the challenges of increased competition, climbing material prices and labor shortages, construction is seeing opportunity with pent-up demand and infrastructure investments,” he stated.
Top priorities cited by construction executives in 2021 reflect this shift:
- Strategic planning (57%)
- Finding solutions for skilled labor shortages (41%)
- Seeking new markets (39%)
- Organizational planning (39%)
The pandemic is seen as far less of a business risk in 2021, with only 1 in 10 respondents listing it among top threats to their business. Instead, traditional threats rose to the top of the list, with 26% of industry leaders citing securing skilled labor as the top threat -- though this is a decline from the 34% citing it in 2020. Other threats edged upward on the list, with 22% indicating concern about lack of work (+3%) and 12% citing concern over material costs (+7%).
“Labor and material costs are the blocking and tackling of the construction industry,” said Natarelli about the findings. “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.”
Yet, as Roger Gingerich, a Marcum tax partner and leader of the firm’s Midwest Real Estate and Construction group, points out, there are ongoing opportunities ahead. “Adaptations made during the pandemic could have positive impacts in some respects. E-commerce is likely to remain robust, leading to increased warehouse demands," he commented. "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," he added, "and that could help relieve some executives’ concerns over lack of work.”
For the complete survey results, visit www.marcumllp.com/construction.
Information provided by Marcum LLP and edited by Becky Schultz.
