Costs Are Up, But So Are Profit Expectations: How Civil Contractors Are Dealing With Supply Chain Challenges
Recent Civil Quarterly study from Dodge Construction Network reveals civil contractors relying on relationships to survive current supply chain issues
HAMILTON, NJ – April 26, 2022 — Civil contractors continue to be optimistic about their business prospects in the 1Q2022 survey published in the latest edition of the Civil Quarterly (TCQ) from Dodge Construction Network.
The passage of the Infrastructure Investment and Jobs Act (IIJA) is driving some optimism about work, revenue and profits. However, the federal measure is expected to exacerbate existing labor and supply chain concerns.
The report, produced in partnership with Infotech, Hexagon, Command Alkon and Digital Construction Works (DCW), is based on a quarterly survey of civil contractors and engineers conducted in November 2021. The findings show that 76% of civil contractors are highly confident about finding work in the next year, and over half expect their businesses to experience profit margin increases.
However, even though 49% expect the IIJA to positively impact their business in the next 12 months and 72% in the next two years, they also expect it to increase their challenges:
- 77% believe it will make skilled workers more difficult to find
- 67% believe it will increase the cost of skilled labor
- 64% believe it will exacerbate existing supply chain issues
While skilled labor shortages have been a chronic problem for contractors for many years, supply chain challenges have increased dramatically in the last year, with scarcities and delays not seen for decades on projects. In fact, 71% of civil contractors now report moderate to severe impacts on their projects due to the supply chain challenges, and 52% believe it will take more than a year for the supply chain to return to normal.
Yet, with profit margin expectations still high, many civil contractors are clearly finding strategies to help mitigate these issues. The most frequently utilized, according to the survey, are:
- Working with a supplier/distributor with whom they have a relationship (71%)
- Adding time to their project schedule based on expected delays (57%)
- Having project owners more engaged in materials procurement (41%)
When asked to rate the effectiveness of strategies they use, relationship-based methods (working with suppliers/distributors and having project owners engage in procurement) were most frequently rated as helpful by over two-thirds of those who utilize these approaches.
These findings suggest that contractors’ relationships are critical to weathering the challenges based on circumstances outside their control.
The Civil Quarterly 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. It is based on original research collected from civil contractors and engineers and is available for free download to inform stakeholders 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://infrastructure.construction.com/.
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About Dodge Construction Network: Dodge Construction Network leverages an unmatched offering of data, analytics, and industry-spanning relationships to generate the most powerful source of information, knowledge, insights, and connections in the commercial construction industry. The company powers four longstanding and trusted industry solutions—Dodge Data & Analytics, The Blue Book Network, Sweets, and IMS—to connect the dots across the entire commercial construction ecosystem. Together, these solutions provide clear and actionable opportunities for both small teams and enterprise firms. Purpose-built to streamline the complicated, Dodge Construction Network ensures that construction professionals have the information they need to build successful businesses and thriving communities. With over a century of industry experience, Dodge Construction Network is the catalyst for modern commercial construction. To learn more, visit construction.com
About Infotech®: Info Tech, Inc., DBA Infotech (Infotech) is a leading SaaS solutions provider for the infrastructure construction industry. Informed by DOT relationships and decades of experience, Infotech develops software solutions that bridge the gaps between owners, consultants, contractors, and other project stakeholders. Whether it be tools for construction administration and inspection or secure online bidding, all of Infotech’s solutions are built to increase transparency, productivity and the availability of data. Infotech is the developer of Appia®, Bid Express®, and Doc Express®, as well as the official contractor for AASHTOWare Project™. For more information, visit infotechinc.com.
About Hexagon: Hexagon is a global leader in digital reality solutions, combining sensor, software and autonomous technologies. We are putting data to work to boost efficiency, productivity, quality and safety across industrial, manufacturing, infrastructure, public sector, and mobility applications. Our technologies are shaping production and people related ecosystems to become increasingly connected and autonomous - ensuring a scalable, sustainable future.
Hexagon (Nasdaq Stockholm: HEXA B) has approximately 21,000 employees in 50 countries and net sales of approximately 3.8bn EUR. Learn more at hexagon.com and follow us @HexagonAB.
About Command Alkon: As the provider of the leading Supplier Collaboration Platform for Heavy Work, Command Alkon solutions deliver supply chain digital collaboration across the heavy construction community. CONNEX, a technology platform built for the industry, enables business partners to automate and integrate business process, capture real-time visibility into heavy material orders and deliveries, and share knowledge to promote certainty of outcomes. Command Alkon is headquartered in Birmingham, Alabama and has offices in locations around the globe. For more information, visit commandalkon.com.
About Digital Construction Works: Digital Construction Works (DCW) is a leading industry application and technology integration services and solution company. We help owner-operators and constructors accelerate the adoption and use of digital workflows, incorporate digital twins of assets, implement best practices, and, if needed, include the right combination of fit-for-purpose third-party technology to improve construction planning, design-build, operations, and project outcomes. We take current disparate third-party applications and integrate them so they all work together, and they can be managed in a single, secure, integrated platform with project insights. Learn more: www.digitalconstructionworks.com.
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