2022 Marcum National Construction Survey

EXECUTIVE SUMMARY

Looking at the responses from scores of construction industry leaders, we see an overall theme of cautious optimism in the industry, buoyed by the federal infrastructure bill, growing backlogs, and other tailwinds. A few figures really stood out:

• Close to 60% of respondents expect to see more opportunity this year, marking the highest optimism for regional opportunities in the last three years. • More than half of respondents expect to see a positive financial impact from the Infrastructure Investment and Jobs Act. • Backlog took a significant leap, with 48% of respondents reporting higher backlog. That’s up from 29% last year. Broadly speaking, the industry is finally returning to pre-pandemic levels of activity but is still hampered by three familiar bugaboos: labor challenges, material costs and availability, and supply chain issues. Survey results suggest more construction companies are facing material shortages and delays even as well over half anticipate expanding opportunities given high overall demand in the space. It’s worth noting that we compiled responses prior to the Fed beginning its aggressive fight against inflation with two consecutive rate hikes (with more likely this year), and before the Russian invasion of Ukraine, which has shaken international geopolitics and significantly affected prices of many key commodities — particularly oil and gas. It was also before public markets began a months-long retreat. Even accounting for these seismic events,

most experts still forecast growth in the U.S. construction industry, with one analysis pegging it at around 8%. To get there, construction companies will have to overcome considerable hurdles in a very competitive landscape. Looking at the most pressing issues cited by survey respondents, some themes begin to take shape: • Labor: Finding and retaining talent is a huge problem for most industries, and construction seems especially hard-hit. Securing skilled labor was the biggest threat respondents cited. We explore this more later in the report, and we offer some ideas on retention and compensation. • Material costs and availability were the second major threats to construction businesses. Respondents cited both volatility in pricing and sometimes lack of availability as roadblocks to growth, with material shortages causing delays for well over half of the respondents. • More than two years since the start of the pandemic, supply chain issues continued to haunt many construction companies, with one respondent summing up a common frustration by saying, “Supply chain delays are making growth difficult.”

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