Marcum Finds Cautious Optimism in the Construction Industry
(Chart courtesy of Marcum)
A recent survey by accounting and advisory firm Marcum LLP, New York, found “optimism tempered by uncertainty” among construction industry leaders.
The 2024 Marcum National Construction Survey said construction executives feel cautiously optimistic. “While there is a general sense of confidence, it is balanced by concerns about economic and political uncertainties, particularly in an election year,” the report said.
“Despite the challenges facing the construction industry, the overall outlook remains positive,” Marcum National Construction Industry Leader Joseph Natarelli said.
But Natarelli noted he was surprised to see how many construction companies and contractors “leave money on the table” by not utilizing valuable tax incentives and programs. “I encourage leaders to explore those opportunities and those created by new technological advances to future-proof their business and brace for potential changes in the outlook,” he said.
Top survey findings include:
Federal Funding Impact: The Infrastructure Investment and Jobs Act, the CHIPS Act and the Inflation Reduction Act are expected to fuel growth in the construction sector. The laws include significant federal funding for infrastructure, semiconductor manufacturing and clean energy projects.
Skilled Labor Shortage: The ongoing struggle to find and retain skilled labor remains a top concern for construction companies. Nearly 30% of respondents cited it as the biggest threat to their business.
Decline in Office Construction: The office construction market remains in its slump due to permanent changes in the white-collar workspace. But healthcare, education and renewable energy projects enjoy strong demand, Marcum said.
Economic Resilience: The construction sector shows “remarkable resilience” with healthy backlogs and fewer bidders per job Despite inflation and cost-of-living increases. This trend indicates a strong demand for construction services, the report said.
Financial Challenges: Higher interest rates and tightening credit conditions are causing project delays and cancellations, Marcum reported. Nearly 40% of respondents indicated that securing project financing has been a significant issue.
Changing Competitive Landscape: The number of bidders per project has significantly declined, with two-thirds of respondents facing just one to four bidders on average. “This represents the first time Marcum survey respondents have reported such a low level of competition for projects,” the report said.
