October 22, 2024
2024 Construction Industry Outlook
The construction industry appears to be poised for more growth this year. It is expected that demand across most sectors will drive growth except for lodging, retail and private office projects. While growth is certainly welcome it does exacerbate issues such as poor worker training and the overall worker shortage. According to the 2024 Construction Hiring and Business Outlook Survey published by the American General Contractors of America, there are several areas driving workforce concerns. This includes the inability to fill open positions where it was found that 77% of respondents are having a hard time filling open positions. All of this against the backdrop of elevated interest rates, higher costs of financing, and other operational challenges. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.
About the Survey
Over 1,200 firms participated from 49 states and Washington DC. Responses were received from companies representing a broad cross section of the industry. This includes 58% reporting $50M in annual revenue, 35% reporting between $50.1M and $500M in annual revenue, and 7% with over $550M in annual revenue. In addition, most firms that participated have between 20 and 99 employees. This includes 39% with between 20 and 99 employees, 18% with less than 20 employees, 30% with between 100 and 499 employees and finally 12% with over 500 employees. It is important to note that firms or their employees were not compensated for participation.
- Continued Growth Projected – Survey respondents are optimistic about growth in almost every area including water/sewer and federally funded projects. 44% of respondents expect to see growth in water/sewer projects, 44% transportation, 41% federal projects, 38% hospital/healthcare and 36% data centers. There is expected to be a decline in demand for certain projects aligning with the prior year results. 25% of respondents expect to see a decline in lodging, 22% retail and 19% private office.
- Biggest Concerns – The survey also wanted to understand the issues which are causing the biggest concerns amongst industry companies. It was determined that 64% of respondents are most troubled by rising interest rates/financial costs, 62% economic slowdown, 58% rising direct labor costs, 56% insufficient worker supply, 56% quality of workers, 34% project delays, and 23% inadequate worker training programs. It is interesting to note the concern about worker quality and training programs. This has been a persistent trend over the past few years.
- Worker Safety Challenges – There was also interest in determining whether there are any new challenges to worker safety. It was found that 81% of respondents are most concerned about the presence of inexperienced skilled labor, 36% mental health challenges, 25% poor subcontractor safety performance, 23% unworkable government safety regulations, and 20% unreasonable enforcement of government regulations. It appears the worker shortage has created concerns about jobsite safety.
- Use of Mobile Technology – The benefits of mobile and other forms of technology are well documented. The survey wanted to understand how it is used and in which forms. It was determined that 67% of respondents use it for daily field reporting, 59% employee tracking, 54% sharing of project drawings, 42% scheduling, 41% equipment tracking, 30% change management, 25% fleet tracking and 17% inventory tracking. It is interesting to note that 8% of respondents indicated they have no plans to use mobile technology.
- Top IT Challenges – The survey also wanted to understand what the biggest issues are preventing technology adoption. It was determined that 43% of respondents identified time needed for training, 42% data security from hackers, 41% employee resistance to new tech, 33% connectivity to remote job sites, 27% keeping software current, and 18% management resistance to adoption.
Contact Us
The good news is that growth is expected to continue in 2024 but only in specific sectors. Unfortunately, high interest rates and financial costs are a persistent problem leading to project delays and in some cases cancelation. If you have questions about the information outlined above, or need assistance with a construction tax, accounting, or other issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
