2019 Construction Industry Survey and Business Outlook

Jan 9, 2019

2019 Construction Industry Outlook

Another year, another construction survey and business outlook has been published. Following the construction industry outlook reports we’ve shared over the last few years, this updated report for 2019 reveals interesting insight.

The survey of more than 1,300 contractors is conducted by the Associated General Contractors of America (AGC) in conjunction with Sage – developer of popular construction accounting software like Sage 100 Contractor and Sage 300 Construction and Real Estate.

In this article, we’ll summarize the most important findings and explain what it all means for the construction industry in 2019 and beyond.

General Construction Industry Outlook

Construction executives appear to remain confident about their market prospects for 2019, although they are simultaneously concerned about finding qualified workers to execute projects. Both the optimism about workloads and the worry about worker availability cut across all regions, project categories and types of contractors.

Contractor optimism extends to all 13 project types included in the survey, with more contractors expecting markets to grow than decline in 2019 for each segment. To cope with the added workload, more than three-fourth of respondents say they expect their firm to increase headcount in 2019.

However, staffing challenges are affecting project costs and completion times.

Strategies to Cope with Tight Labor Supply

Despite plans to expand headcount, 78% of construction firms report that they are having a hard time filling salaried and hourly craft positions. However, that metric was down slightly from 83% in 2018.

Construction firms are using a variety of strategies to cope with the growing demand and tight labor supply. Nearly 60 percent raised base pay rates, while many also increased or introduced incentives, bonuses and benefit contributions.

Between one-fourth and one-third of firms are using methods to reduce onsite worktime, such as building information modeling (BIM) and offsite fabrication, or using labor-saving equipment, including drones, robots and laser- or GPS-guided machinery. A majority of firms plan to invest more in training and development in 2019, while nearly half expect to increase investment in information technology (IT).

Growth Expected in All Sectors

This year’s survey showed an unusually high degree of uniformity about the outlook for different project types. For every segment, between 23 and 32 percent of respondents expect the dollar volume of projects they compete for to increase, while for all but one segment, between 11 and 16 percent of respondents foresee less work available in 2019. The difference between the positive and negative responses (the net reading) was clustered between 10 and 17 percent, except for multifamily residential, where the net reading was only 5 percent. Market perceptions are more uniform than in the 2018 hiring and outlook survey, in which net positive readings ranged from 8 to 22 percent.

The most noteworthy sectors scoring the highest net positive readings include:

  • Public building construction (17% net positive)
  • Highway, kindergarten-to-12th grade (K-12) school, and hospital construction (16% net positive)
  • Projects for federal government agencies and retail/warehouse/lodging (15% net positive)
  • Water & sewer projects and transportation facilities (14% net positive)

Embracing Construction Software and Technology

Firms are adopting a variety of approaches to replace workers or allow for use of workers with less training than before.  In addition to using methods that reduce onsite worktime including lean construction, BIM, or other virtual construction techniques, many construction firms also report that they follow collaborative project delivery methods. A majority of firms (51%) report they use file-sharing sites such as Dropbox to collaborate with partners, 36% report they use online project collaboration software, and 22% report using BIM.

Respondents were also asked whether their investment would increase or decrease in 14 categories of construction software. The largest share of firms (30% each) plan to increase their investment in project management software and document management software. About a quarter of firms will increase investment in estimating software (26%) and scheduling software (24%). Very few firms—generally around 1 percent—expect to decrease investment in any type of software.

The Bottom Line

Contractors are optimistic about demand for construction services. Overall economic conditions appear robust, with private sector demand for many types of projects expected to expand next year, thanks in large part to tax and regulatory reforms that are making it easier for many firms to invest in new construction projects.

At the same time, many state and local governments have increased their investment in public-sector projects. And contractors remain hopeful that Democrats and Republicans will be able to enact new, and much-needed, federal infrastructure investments in 2019.

Yet, even as they anticipate growing investments in all types of construction projects, contractors are increasingly concerned about their ability to find qualified workers to hire, train and employ. The growing labor shortages are prompting many construction firms to become more efficient by adopting new technologies and new techniques that allow them to build more with less. Labor shortages are also pushing employers to boost pay and benefits for workers and prompting firms to increase investments in in-house training programs. At the same time, shortages are also contributing to higher construction costs and slower completion schedules for many projects.

Previous Year Reports

Want to compare the 2019 survey to previous reports we’ve posted?
Just click below to find the year and report you’d like to see:

2018 Construction Survey  |  2017 Construction Survey  |  2016 Construction Survey

2019 Construction Industry Survey

Get the Full Report

Construction Industry Survey ThumbnailClick below to request a copy of the 2019 Construction Hiring and Business Outlook conducted by Sage and The Associated General Contractors of America (AGC) .

This detailed 11-page report takes a deeper dive into both the opportunities and challenges the construction industry survey respondents expect to experience in 2018 and beyond.

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