Why Contractors Need to Focus on Resiliency in 2024
Published on by Erik Wurtenberger in Construction
In FMI’s 2024 North American Engineering and Construction Industry Overview for Q1, much of the research supports building a resilient, future-ready business. FMI’s Chris Daum opens the report with a lead article that covers this need for resiliency in greater depth.
Daum writes that due to continued inflation and high interest rates, banks are continuing to be more selective about the projects they finance. Contractors will need to demonstrate they can manage risk and work efficiently to get the working capital needed.
There are various ways to stay resilient in this market:
- Find innovative ways to tackle everything from labor shortages to productivity inefficiencies.
- Stay up to date on geopolitical issues as well as domestic factors like supply chain issues.
- Concentrate on the factors that are within your control – don’t get caught up in the highs and lows.
It will be very important to develop a clear strategy for utilizing technology to improve efficiencies and differentiate contractors from their competition. This will help attract young talent and ensure work gets done amidst continued labor shortages.
Other factors to help contractors with resiliency include:
- Continually revisit and update your strategic plan
- Invest in your people across the organization
- Focus on improving operations
- Tie investments to your strategic plan and clear, measurable goals
Specific sector insights
Further into the report, FMI also covered projected growth within specific sectors of commercial and residential construction, as well as a comprehensive outlook for the industry overall. Some of the most interesting highlights include:
- The highest-growing sectors in 2023 were manufacturing, multi-family residential, lodging, sewage and waste removal, water supply, and conservation and development. Anticipated annual growth rates in these sectors is expected to be over 20% from 2022 levels.
- Office, healthcare, educational, religious, public safety, amusement and recreation, transportation, power, and highway and street are expected to grow between 10-20% in 2023.
- Single-family residential will contract sharply in 2023 compared to 2022.
- The latest Non-residential Construction Index (NRCI) score of 46.0 is relatively flat compared to the previous quarter and makes the seventh quarter in a row of a score lower than 50, showing that participants are remaining cautious about the overall outlook for 2024.
Interpreting the trends
While the macroeconomic environment outside of the construction industry continues to be fluid, there are opportunities for contractors. Knowing where to position your company in the market can be crucial to success.
If you’d like to talk about how these trends may impact your construction business, or want to find a better, more efficient process or improve your bottom-line business results, contact us for a free consultation with one of our top construction industry pros. As always, we’re here to help.