Builders Heading for Robust Year, Says Industry Report

All signs are pointing to increased work for the construction industry in 2022, says a well-known construction association official, with infrastructure spending expected to be particularly noticeable later in the year.

Speaking in a webinar, Anirban Basu, chief economist for the Associated Builders and Contractors, suggested that the amount of work for builders may not be the issue as much as the nature of the work.

Contractors, he said, should “think very long and hard” before entering into any contractual obligations, making certain in the process to have “enough margin and contingency.”

Basu, who is also the chief executive officer of the Baltimore-based Sage Consulting Group, anticipates an increase in spending for any number of public projects at both the state and local level, particularly in new school construction.

But Basu cautions that the year ahead will hardly be one without challenges, noting ongoing price increases for a number of building materials, including an unprecedented 146% jump in steel mill products since late 2020.

Factors working in favor of materials price decreases next year include a likely inflation rate decrease as well as an improved supply chain, especially in aluminum, copper and steel products.

Ultimately, Basu recommends that construction companies should think big: “Significant technologies are more expensive and recruiting costs are significant and training costs are significant.”

But, he continued, “It’s nice to have a larger line of credit and more bonding capacity to go after some of these large scale projects that are coming down the pipe, whether in infrastructure or other segments.”

A recent consumer confidence index released by the Associated Builders and Contractors showed increased sales expectations as of November by nearly 65% of respondents, compared with 42% a year ago.

Similarly, just under 25% of respondents a year ago said they expected their profit margins to increase, while nearly 35% said the same last month.

​By Garry Boulard

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