In Q4 2020, Dodge Data & Analytics’ The Civil Quarterly (TCQ) reported that fewer than half (43%) of civil contractors believed fluctuations in the cost of construction materials had impacted their projects at the time. Today’s Q1 report, however, revealed a stark contrast to those findings. The vast majority have negatively felt these impacts, with 71% of civil contractors experiencing serious issues getting materials to projects and 76% now are concerned with cost increases for construction materials over the next six months.
With reports of moderate drops in backlog levels, revenues and profit margins in 2020, civil construction has faired the pandemic reasonably well. In fact, concerns about these three factors leveled off for most respondents by Q1 2021. In addition, 65% of civil contractors are optimistic about the ability of the market to provide new work, up from 58% from last quarter.
However, the positive outlook about new work is counterbalanced by the increased concern about the cost of materials. Over two-thirds (69%) of those who reported some concerns about material costs expect the price of steel to increase, and many also expect increases in the cost of pavement/concrete and aggregates. Lumber and piping were also frequently mentioned by the contractors surveyed. In addition, concerns about the cost and availability of construction equipment have grown, and Q1’s TCQ found that 34% of civil contractors reported impacts from the previous six months due to the cost of equipment, and 43% are concerned that prices are going to continue to rise.
The delay in these direct experiences of supply chain challenges may suggest long-term effects that are harder to rectify. While it is unclear whether this would impact the large infrastructure investments currently recommended by the Biden administration, they may impact the degree to which the civil construction sector can successfully bounce back in the first half of 2021.
In addition to supply chain insights, TCQ also featured an in-depth look and benchmark regarding the ways in which contractors gather and analyze data. The findings reveal an industry that is already seeing the advantages of their use of data but is also still reliant on manual processes. For instance, many still use paper forms for collecting data, especially for safety (38%) and material project delivery (31%). And of those collecting data, 32% manually conduct the actual analysis of it on paper as well, especially around safety.
Despite these limitations, about half of civil contractors report that their data gathering and analysis efforts result in:
- More accurate estimations during the bidding process (56%)
- Reduced rework (52%)
- Better productivity (52%)
- Increased budget performance (51%)
- Improved safety (48%)
TCQ provides a quarterly snapshot of the current business health of contractors operating in this dynamic environment and explores trends in the industry: The report is the result of a partnership with Founding partner Infotech, Platinum partner Hexagon and Gold partners Command Alkon and Digital Construction Works, and is based on original research collected from civil contractors and engineers. It is available for free download to help all those who have a stake in the U.S. civil construction industry. Future editions will continue to address a wide range of related topics providing a comprehensive view of this complex and ever-changing segment of the construction economy. Click here to download a copy: https://www.infotechinc.com/thecivilquarterly/.