Construction contractors expect increasing demand fornumerous types of projects in 2022 despite ongoing supply chain and laborchallenges, as most firms plan to add workers this year, according to recent surveyresults released by the Associated General Contractors of America and Sage.
The findings are detailed in Expecting Growth WhileCoping with the Lingering Impacts of the Pandemic: The 2022 Construction Hiring& Business Outlook.
“Contractors are, overall, very optimistic about the outlookfor the construction industry in 2022,” said Stephen E. Sandherr, theassociation’s chief executive officer. “While contractors face challenges thisyear, most of those will be centered on the need to keep pace with growingdemand for construction projects.”
The percentage of respondents who expect a market segment toexpand exceeds the percentage who expect it to contract—known as the netreading—in 15 of the 17 categories of projects included in the survey.Contractors are most optimistic about the market for highway and bridgeconstruction, which has a net reading of positive 57%. They are similarlyoptimistic about transit, rail and airports projects, with a net reading of 51%,and water and sewer projects, with a net reading of 50%.
These segments all stand to see increased federalinvestments because of the recently passed Bipartisan Infrastructure bill.Contractors are also upbeat about demand for federal construction projects,with a net reading of 37%, and power construction, with a net reading of 29%.
The highest expectations among predominantly private-sectorcategories, with a net reading of 41% each, are for warehouses and otherhealthcare facilities, which includes clinics, testing facilities and medicallabs. The outlook for hospital construction is also strong, with a net readingof 38%.
Contractors were also optimistic about multifamily residentialconstruction, with a net reading of 32%, and manufacturing construction, with anet reading of 27%. Expectations were more subdued, however, for publicbuildings, with a net reading of 20%; kindergarten through 12th grade school construction,with a net reading of 19%; higher education facilities, with a 16% net reading;and lodging, with a 6% net reading. Only two categories received negative netreadings, both of -8%: retail and private office construction.
Optimism about growing demand for many types of constructionprojects is leading many firms to plan to hire workers this year. Seventy-fourpercent of respondents expect their firms will expand headcount in 2022,compared to just 9% that who expect a decrease. Forty-seven percent of firmsexpect to increase their headcount by 10% or less. However, 22% say theirheadcount will grow by 11 to 25%, and 5% anticipate an increase of more than 25%.
Adding those workers will be a challenge, however. Anoverwhelming 83% report they are having a hard time filling some or allsalaried or hourly craft positions, compared to only 8% who say they are havingno difficulty. And three-fourths of respondents say it will continue to be hardto hire or will become harder to hire this year.
The pandemic continues to impact the construction industry,association officials noted. Eighty-four percent of respondents report costshave been higher than anticipated, while 72% say projects have taken longerthan anticipated because of the pandemic. As a result, 69% have put higherprices into bids or contracts, while 44% have specified longer completiontimes.
Supply chain bottlenecks are also impacting construction.Only 10% of firms report they have not had any significant supply chainproblems. Sixty-one percent have turned to alternative suppliers for materialsand 48% have specified alternative materials or products.
Rising construction costs and slowing schedules havecontributed to a significant number of project delays and cancellations.Forty-six percent of contractors report having a project delayed in 2021 butrescheduled, while 32% had a project postponed or canceled that has not beenrescheduled.
“The last two years have become increasingly unpredictable,due in large part to the coronavirus and public officials’ varied reactions toit,” said Ken Simonson, the association’s chief economist. “But, assumingcurrent trends hold, 2022 should be a relatively strong year for theconstruction industry.”
Officials with Sage noted that firms are being morestrategic about information technology as they try to remain competitive in thecurrent environment. Sixty-one percent of contractors indicate they currentlyhave a formal IT plan that supports business objectives. An additional 7% planto create a formal plan in 2022.
“Amid the challenges the industry faces, technology plays anessential role in keeping teams connected and projects moving,” said DustinStephens, vice president of construction and real estate at Sage. “The past fewyears have highlighted just how crucial mobile and cloud-based solutions are,and we will continue to see these technologies play an integral role in helpingconstruction firms bounce back.”
Stephens added that most firms plan to keep their technologyinvestment about the same as last year. When asked whether they planned toincrease or decrease investment or stay the same in 15 different types oftechnologies, the majority of respondents—ranging between 69 and 89%—said theirinvestments would remain the same.
Association officials urged public officials to take stepsto help the industry recover in 2022 and avoid measures that will undermine thesector. They noted that the Biden administration’s vaccine mandates will promptmany vaccine-hesitant workers to leave the relatively few employers covered bythe orders and move to smaller firms that are not covered by the rule andemploy over 60% of the industry’s workforce.
“Given how many firms are currently looking to hire, manyvaccine-hesitant workers will be able to switch jobs instead of taking a shotthey have already resisted for over a year,” Sandherr said. He added that theadministration’s plans to increase tariffs on Canadian lumber and maintainexisting ones on other key construction materials will make it harder for firmsto accurately bid upcoming projects and complete them on schedule.
Sandherr said the association will continue to push for newfederal investments in workforce development and make sure Congress keeps itspromise to boost funds for infrastructure. He added the association wouldcontinue to encourage construction workers to get vaccinated, and is planningto release new Spanish-language public service ads on the subject later thismonth to accompany a series of ads encouraging vaccinations AGC released lastyear.
“Our ultimate goal is to make sure that contractors’optimistic outlook for 2022 becomes a reality,” Sandherr said.
The Outlook was based on survey results from more than 1,000firms from all 50 states and the District of Columbia. Varying numbersresponded to each question. Contractors of every size answered over 20questions about their hiring, workforce, business, and information technologyplans.
