The Associated General Contractors of America have gone on to report on January 4 that the construction sector is all set to see a mix of ups and downs throughout varied segments across the new year. Post surveying almost 1,300 contractors along with Portland-based Sage, AGC went on to release the 2024 outlook when it comes to commercial construction.
According to the chief executive officer of AGC, Stephen A. Sandherr, the survey finds the vision for 2024 being decidedly mixed, as contractors forecast transitions in project demands, the issues they will be facing, and the technology they will be sticking to.
The challenge of labour shortages, high interest rates, as well as supply chains has gone on to improve, but this is still far from normal, Sandherr added. This is again compounded with fears when it comes to high interest rates as well as the possibility of a recession.
Infrastructure, along with public projects, remain prime
According to a top economist from AGC, Ken Simonson, optimism around most project types was indeed positive but lower than what it was a year back.
Contractors anticipated the value of infrastructure projects to be much higher in the new year, as per the survey. Water, along with sewer, was at 32%, which was closely followed by transportation at 30%, as well as bridge and highway projects at 30%, the survey results showed.
Lodging, retail, along with private office construction are going to be bearish, said Simonson. The value when it comes to lodging is anticipated to dip by 3%, retail by 15%, and private offices by 24%, the survey predicted.
Although the value of public projects is expected to elevate, the number of respondents who actually went on to work on projects supported by the Bipartisan Infrastructure Law happened to put forth a different story. As per the survey, just 9% of respondents went on to say that they actually worked on projects that happened to be supported by the law.
6% of contractors said they went on to win infrastructure law project bids but have not started work, and 7% said they do bid on projects but have not won any awards yet, added the survey. A total of 33% of respondents went on to say that they don’t anticipate their businesses getting altered due to the law. The left-over 30% said they did not know what changes would take place.
AGC has gone on to ask the contractors to forecast whether their workforce may increase in 2024. A total of 69% of the firms responded that they would see an overall increase when it comes to their headcount. From that group, almost 50% said their headcount would increase by 10% or less. Another 18% said their headcount would rise by over 11%, and only 4% opined that their firms would grow by more than 25%.
The increasing interest rates along with financing costs happened to be the top concern for 64% of contractors in 2024, said the survey results. Other costs like trucking, insurance, as well as design services happened to be at 63%, and the economic slowdown or recession was at 62%.
The remaining top issues were material costs, worker quality, direct labor costs, and, of course, an insufficient supply of workers or even subcontractors.
Construction goes on to invest in technology
As per Sage’s vice president of marketing and real estate, Dustin Stephens, technology goes on to play a pivotal role when it comes to helping teams elevate their efficiency with limited resources.
Between 61 and 89% of firms went on to state that their technology investment will happen to be the same, the survey put forth. Accounting and project management software happened to grow by 38%. Firms also went ahead and invested more dollars toward document management as well as estimating software.
As per the survey, almost two-thirds of construction firms went ahead and said that they will make use of mobile software technology when it comes to daily field reports. Almost 60% went on to say that they would use it for employee time tracking as well as approval.
The largest information technology issue when it comes to contractors was finding the time to execute new technology as well as training employees. Cybersecurity, along with the resistance of employees to technology, was placed second and third, respectively, when it came to IT challenges.
The industry requires more young people in the trade pipeline
Sandherr had gone on to make a call to federal as well as local officials to boost investment when it comes to construction training. He added that it was indeed critical to federally funded projects, which most likely were to start in 2024, which also went on to boost the sector.
Sandherr added that many kids aren’t really aware that construction happens to be a career path.
According to AGC officials, they would stress new funding for construction education as well as training, by way of using momentum from talks around programs like the Pell Grant. Sandherr remarked that the AGC looked to see more people enter the country lawfully, thereby helping patch workforce shortages.
Contractors share their forecast
The CEO of South Carolina-based Crowder Constructors, Lynn Hansen, said that her firm’s future happened to be bright as it went on to work on public projects.
Lynn said she is being optimistic when it comes to Crowder’s markets for the coming year. Their infrastructure markets, where they go on to focus on water, waste, power, highways, as well as bridges, are going to be fairly robust.
The executive went on to note that labor still happened to be a top concern going forward, but the person who the company recruited happened to make more than what they earned previously. New engineers required the least training, so the company was looking to figure out ways to streamline the procedures.
She went on to explain that they happen to have good job training for project managers as well as leaders; however, it is not as good at the craft level. Crowder, apparently, established a registered apprenticeship program some years back so as to pick up the slack.
Although the supply chains have gone on to improve, finding some pieces of electrical equipment has gone on to remain a challenge, Hansen said. Some of the delays have gone from months to even years and have also created costs for both general contractors along with their clients, she added.
Hansen says that her new year’s wish is to get some stability in the sector. Even their employees would like that too.
Going by the numbers outlook in Minnesota
The outlook for 2024 happens to be slightly more positive than it was last year, as per the Associated General Contractors of Minnesota’s recently published 2023-2024 Minnesota Construction Industry Assessment. Less than a quarter of respondents to the survey—23%, to be precise—expect market conditions going ahead and affecting their firm to dip in the coming year. If compared, in last year’s survey, 32% forecast declining conditions.
Upon being asked what elements are going to be the most impactful on their business, survey respondents happened to be positive about project funding and technology shifts. But the survey also happens to show concerns when it comes to construction labor costs, inflation, as well as workforce availability. In general, there is a sense of nervousness when it comes to the overall economy, opined the CEO of AGC-Minnesota, Tim Worke.
Businesses happen to be most optimistic when it comes to alternative energy, transportation, as well as heavy/utility/civil engineering work, all thanks to government spending in these areas. To be exact, 58% of respondents anticipate alternative energy to be an expanding market chunk in 2024.
Only 3% happen to be seeing only good things on the horizon for commercial offices as well as retail. Multifamily construction does better, but at 28%, it is closer to the bottom than the top in terms of optimism.
Other key takeaways from the AGC-Minnesota survey:
- Employers who happen to offer a positive workplace culture are regarded as the top factor in attracting as well as retaining talent, while promoting and also offering remote work options happen to be on the decline among employers vis-Ã -vis prior responses.
- Coming up with a diverse workforce happens to be a challenge in both field and office employment; however, the signs of enhancement are seen in the annual comparative data.
- The three most challenging trade positions that need to be filled are those of truck drivers, equipment operators, as well as labourers.
