According to the Construction Industry Round Table (“CIRT”), the CIRT Sentiment Index seeks to provide timely, authoritative, and forward-looking insights into the complex design and construction markets as well as a view on the direction of the overall U.S. economy. In addition, each quarter includes topical issues of importance to the construction community to provide input and to give a voice to CIRT’s members on matters of interest.
FMI, in partnership with CIRT, released a 2021 fourth-quarter outlook using various indices which combine to form an overall sentiment index for the upcoming calendar quarter-end.
While 2021 Q3 saw record highs, the Q4 index components all saw a decline except for cost of labor, which continues to rise in conjunction with ongoing labor shortage issues and persistent higher prices. Other contributing factors noted in the report include lingering COVID-19 cases and related controversial mandates.
The FMI report goes on to note that CIRT members were surveyed to comment on current issues, and the questions that have arisen from said issues. CIRT members were asked to rank certain factors that impact cost escalations, and their clients’ willingness to accept higher expenses. Also, over 80% of respondents noted project delays in 2021, while approximately 20% had projects cancelled due to supply chain issues.
Reviewing the expectations of the members, it was noted that most expectations were to see either no change or slight improvement over the final quarter of 2021. Backlog, cost of labor, and cost of materials were are expected to be moderately higher than Q3, while productivity is expected to have no change.
Members were asked about how purchasing behaviors may shift due to the current issues noted with rising costs and supply chain issues. It was noted that there is expected to be an increase in willingness to consider substitute products and materials, as well as supplier/channel relationships. There was no change expected in the frequency of materials orders and inventory levels.
Finally, members were asked about cost escalations and the main contributing factors related to remote working, increased insurance costs, and pay scales due to attempting to ensure workforce retention.
To read further, view the full FMI CIRT 2021 Sentiment Survey report here.
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