In a recent report published by the industry experts at FMI, they foresee that In the years ahead there will be huge opportunities for growth. However, right now price fluctuations, supply chain issues, margin protection, and labor costs will continue to make navigating this climate tricky.
Some highlights from this report include:
Spend more for less
When material and labor prices go up, projects of course become more expensive to execute. It poses a risk if materials prices aren’t locked in early or contingencies aren’t built into the contract, which can prove especially costly if a project is delayed waiting on components.
Wage inflation and shortages of workers
The tight labor market is not a new issue for the construction industry but will intensify as firms compete for skilled labor and wage inflation ripples through the economy. The construction industry appears to be behind the curve when comparing rising employment costs to the broader economy.
The big picture for economic growth
There is plenty of good news for the year ahead. Passage of the IIJA will create a huge wave of funding for nonresidential construction, alongside an already thrumming residential sector. Contractors need to be strategic about plotting their path forward and determining where to put their resources as the industry shifts.