2022 Marcum National Construction Survey Finds Construction Contractors to Be Cautiously Optimistic

Construction contractors remain cautiously optimistic a year after the industry’s post-pandemic comeback started in earnest, according to the 2022 Marcum National Construction Survey.  Contractors reported being buoyed by the federal infrastructure bill, growing backlogs, and other tailwinds.

The annual survey is conducted by Marcum LLP, a construction accounting firm. The survey covers a range of topics, from top priorities to problems, strategies, possible solutions, and the lingering effects of the pandemic. 2022 is the third iteration of the national industry study.

Among this year’s key findings, close to 60 percent of respondents said they expect more opportunity in the future, up from 54 percent in 2021.  More than half (69 percent) expect the Infrastructure Investment and Jobs Act to have a positive financial impact for their businesses. 

The industry’s upbeat outlook is also supported by a significant increase in backlogs, with 48 percent of respondents (up from 29 percent in 2021) reporting higher backlogs than the previous year. 

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Roger Gingerich, CPA, leads Marcum’s Midwest construction practice.

“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,” says 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.”

Selected Highlights

Some other key finds of the 2022 report include the following:

  • Construction companies report that their finances remained solid, with just 13 percent of respondents saying it had become more difficult to obtain financing and the majority saying their access to capital was the same or improved.
  • Material price volatility remained the No. 1 top issue for construction company executives, followed by healthcare and insurance costs. Workers’ compensation issues jumped to No. 3, edging out income taxes.
  • 95 percent of respondents increased worker pay to combat labor shortages. Of those, 67 percent offered raises of 4 percent or more, and 13 percent increased compensation by more than 8 percent.   
  • 27 percent percent of respondents are filling skills gaps by forming or considering joint ventures.
  • The number of respondents considering an ESOP more than doubled from the prior survey, and the number of ESOP companies increased by 5 percent.
  • Companies restructuring for growth climbed from 28 percent in 2021 to 40 percent this year. 23 percent of respondents said they are seeking M&A opportunities, up from 13 percent a year ago.
  • 49 percent of respondents said they were working on larger projects in 2021 and just 11 percent reported that the average job size had decreased.
  • 89 percent said jobs were delayed by material shortages, labor shortages, or both at some point during the year.
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Joseph Natarelli is national leader of Marcum’s Construction Services practice and office managing partner in New Haven, Conn.

“Mergers & and acquisitions deal value in the global construction sector nearly doubled last year, and that mirrors what we’re seeing among our clients. We’re also seeing better structure around those deals, indicating increased sophistication in these transactions,” says Joseph Natarelli, national leader of Marcum’s Construction Services practice and office managing partner in New Haven, Conn. “Ongoing high backlogs are increasing the attractiveness of the construction sector for private equity. Supply chain issues and material cost increases are making it more advantageous for bigger players to pool purchasing power, while shortages of skilled labor and increasing specialization are both driving consolidation within the trades. Finally, many construction companies are emerging from the pandemic without a succession plan, and M&A is an option for them.”

For the complete survey, visit www.marcumllp.com/construction

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