Contractors remain cautiously optimistic in 2023

Simonson

According to Simonson, 69 percent of construction firms expect to add to their headcount in 2023. Of this percentage, Simonson says just under half of firms expect their headcount to increase by 10 percent or less; 18 percent of respondents expect 11 to 25 percent growth; and 5 percent of respondents expect growth to be greater than 25 percent.

Increasing headcounts in 2023 will likely not be easy, though.

“An overwhelming 80 percent report they are having a hard time filling some or all salaried or hourly craft positions, compared to only 8 percent who say they have no difficulty,” Simonson says. “In addition, the majority – 58 percent – of respondents say either hiring will continue to be hard to will become harder. Only 15 percent say it will become easier or remain easy to hire, while 27 percent expect no change.”

Continued worker shortages likely explain why 72 percent of firms last year increased base pay rates more than they did in 2021, Simonson says. That number is up from the 62 percent of firms that boosted pay rates more in 2021 versus 2020.

Thirty-three percent of firms responding to the survey, meanwhile, introduced or increased incentives or bonuses in 2022, and 7 percent did not increase pay, incentives or benefits.

Additionally, as supply chain and lead time issues continued through 2022, only 9 percent of firms reported that they did not have any significant supply chain problems.

“To cope with these problems, more than two-thirds of respondents have reacted by accelerating purchases after winning contracts,” Simonson says. “A majority turned to alternative suppliers. Almost half have specified alternative materials or products, while close to one-quarter have stockpiled items before winning contracts.”

Simonson adds that most contractors have experienced project delays or cancellations, with only one-third reporting no postponements or cancellations.

Among the respondents reporting postponed projects in 2022, 39 percent say a project was rescheduled and 36 percent say a postponed or canceled project from last year has yet to be rescheduled. Thirteen percent of firms have already experienced a canceled or postponed project that was scheduled to begin in the first half of 2023, according to the survey.

“The main reason for cancellations and postponements was rising costs, which was cited by nearly half of contractors,” Simonson says. “Another 12 percent said the main reason was that the owner had reduced funding available, while 8 percent said the main reason a project was canceled or postponed was because of a delay in the likely completion date. Only 5 percent cited reduced demand for the completed project as the main reason for a cancellation or postponement.”

Technology trends

Stephens

Dustin Stephens, vice president of construction and real estate at Sage Policy Group, says technology and connectivity solutions will play a crucial role in helping businesses navigate ongoing challenges.

According to Stephens, 61 percent of firms taking the survey report they have a formal IT plan to support their business objectives. Another 8 percent say they plan to adopt one in 2023. Both percentages are consistent with 2022’s findings, Stephens says.

Additionally, Stephens says most firms plan to keep their technology spending about the same as 2022. Between 25 and 33 percent of firms say they plan to increase technology investments.

The top category for increased spending was document management software, for which Stephens says nearly one-third of respondents plan to increase spending. Following document management was project management, accounting software, estimating software, tool and asset management or tracking, and human resources technology.

“As construction firms seek more flexibility and anytime, anywhere access from their solutions, we have seen more firms turning to cloud-based technologies the past few years,” Stephens says. “The most prevalent use of cloud-hosted technology is in project management, with 57 percent of firms using it. Nearly half (47 percent) of contractors use cloud technology for field operations, while 45 percent use cloud technology for accounting and 42 percent use cloud technology for time tracking.”

Additionally, Stephens says 16 percent of firms use cloud technology for tool management while 21 percent do not use the cloud.
Mobile software technology adoption also continues to increase, Stephens says. Sixty-eight percent of firms use mobile software for daily field reports, and 61 percent will use mobile technology for employee time tracking and approval. Fifty-eight percent plan to use it for sharing drawings, photos and documents, and 56 percent plan to use mobile software to access customer and job information from the field.

“These technologies deliver seamless integrations with software used both inside a business and by external stakeholders,” Stephens says. “They also provide automatic updates so solutions are always current and offer superior connectivity and security features.”

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