The construction industry has fared well despite the pandemic, but 2022 proved to be a unique year. Supply chains remained historically disrupted and unpredictable—if pricing and delivery dates were even obtainable—with input pricing up on average 40% from February 2020.
We started 2022 by predicting a 650,000-worker shortage, and the U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey reports proved those levels accurate. Not surprisingly, wages grew by an average of 5.8%, while regulations piled up and the cost of capital rose.
While we enter 2023 with construction backlog at a solid 9.2 months, construction confidence in sales has fallen to 56.8. When I talk with contractors, there is increasing concern that awarded contracts may experience delayed starts or even be canceled.
I believe 2023 will be characterized as the year of leadership, with the first half of 2023 defining 2024.
Construction executives will need to be pragmatic and not only confront reality themselves but also be transparent and factual with their clients and their employees while managing in real time. Clarifying expectations early and frequently will be imperative, and working synergistically with the supply chain to develop innovative project solutions for clients will be key to avoiding delayed starts and canceled projects. Being crystal clear with employees about the realities of the market and the company’s pipeline of work will be crucial to attracting and retaining top talent.
This year, it will be leadership that separates high performance from the field and solidifies market trust and a reputation of being the contractor of choice.
