Marcum's 2023 Northeast Ohio Construction Survey

10 THE 2023 MARCUM NORTHEAST OHIO CONSTRUCTION SURVEY

Strength In Numbers

Amid all the threats from inflation, interest rates, costs, and labor shortages, the fundamentals of construction in Northeast Ohio remain strong. Most notably, backlogs are still solid, though they have shown some softening year-over-year. A combined 32% of respondents expect lower backlogs this year, up from 24% in 2022. And 20% expect a reduction of more than 15% this year, which is up from 14% expecting such a significant reduction last year. And while job sizes have declined slightly, which is likely attributable to tightening credit affecting some large construction projects, just 12% of respondents said their jobs were smaller, ticking up just 1% from prior year.

While persistent, problems with materials also seem to be abating, with managing material vendors declining as a top priority from 42% in 2022 to 30% this year. Material costs also declined as a “biggest threat” to respondents’ businesses from 25% in 2022 to 10% this year.

One notable figure is the number of bidders on each job, which shows that companies are becoming more selective in how and where they bid on projects. This could help improve margins in the coming year, and it might be a sign of decreasing competition as other companies remain busy enough that they are not compelled to bid on as many projects. In 2022, 39% of respondents said they faced an average of 1-4 bidders on a job. That figure leapt to 66% in 2023, corresponding with declines in percentages facing higher numbers of bidders. This likely shows both challenges in labor and an indication

that companies are bidding on projects they are confident they have the resources and experience to execute, rather than the more aggressive approach of the past couple of years.

20%

Of respondents expect 2023 backlogs to be lower by 15% or more

30%

Cited managing material vendors as a top priority for 2023, down 12% from last year

66%

Of respondents face 1-4 competing bidders on average in 2023, up from 39% last year