2020 Construction Industry Survey and Business Outlook

Jan 10, 2020

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 2020 reveals important insight including what’s expected to be strong demand for work amid strong demand for workers.

In this article, we’ll summarize the most important findings and explain what it all means for the construction industry in 2020 and beyond.

About the Construction Survey

The survey of nearly 1,000 contractors was conducted throughout November and December of 2019 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. Participating construction firms represent a broad cross-section of company sizes across 48 states.

General Construction Industry Outlook

Contractors appear to be very optimistic about demand for construction in 2020, despite signs the overall economy may be slowing.  At the same time, many construction executives are troubled by labor shortages (a theme that seems consistent over the last several surveys) and the impact that those shortages are having on their operations, training & safety program and bottom lines.

Staffing challenges are affecting project costs and completion times. Nearly half of respondents said costs were higher than expected, and almost as high a share of firms are building higher prices into new bids or contracts. Two out of five firms experienced longer-than-anticipated completion times, and more than one-fifth of firms are now quoting longer completion times.

Coping with Construction Labor Shortages

To cope with labor shortages, half of the respondents reported raising base pay rates by more than in 2018. Many also increased or introduced additional incentives, bonuses and benefit contributions.

Some firms reported that they’ve adopted new, labor-saving technologies like drones, robots, 3-D printers and laser- and GPS-guided equipment to become more efficient. In addition, more than a quarter of firms (28 percent) have adopted labor-saving methods like lean construction and Building Information Modeling (BIM).

Nearly half the firms expect to increase their investment in information technology (IT) in 2020, with the largest share planning to increase investments in project management software.  In addition, respondents cited a wide variety of ways their companies plan to use mobile construction technology and to collaborate with project partners more efficiently using file-sharing sites and construction project collaboration software.

See Also: 3 Trends Changing the Construction Industry

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Top Construction Industry Worries in 2020 (Graph)

Strong Demand for All Market Sectors

On balance, contractors expect an increase in 2020 in the available dollar value of projects for which they compete. More respondents expect their market segment to expand than those who expect it to contract for all 13 categories of projects included in the survey.

As in the 2019 construction survey, this year’s survey shows a very high degree of uniformity about the outlook for different project types. For every segment, between 27 and 36 percent of respondents expect an increase from 2019 in the dollar value of projects they compete for, while between 11 and 21 percent of respondents foresee less work available in 2020. Overall, the level of optimism was somewhat higher than in the 2019 hiring and outlook survey.

Technology Investments Will Grow in 2020

Nearly half of respondents report their firms will increase IT investment in 2020. They were asked to state whether their investment would increase or decrease in 15 categories of software. The largest share of firms – 30 percent – plan to increase their investment in project management software while about 25% will increase investment in document management and fleet tracking/management software.  Very few firms – generally around 1 percent – expect to decrease investment in any type of software.

The need for mobile capabilities on the job site continues to drive the largest usage of cloud-based technology. The top ways contractors plan to use mobile software are for daily field reports (68 percent of respondents), employee time tracking and approval (61percent), accessing customer and job information from the field (55 percent), and the sharing of drawings, photos, and documents (55 percent). Each of these percentages is substantially higher than a year ago.

The Bottom Line

Most contractors expect demand to remain strong, and in many cases strengthen, in 2020. In particular, they expect demand for most types of public and institutional construction to expand.  A decade of economic expansion has left many public and institutional owners in good fiscal shape and is leading to robust demand for construction of new, and renovation of existing, facilities.

While contractors are optimistic about their ability to find work, they continue to worry about their ability to find qualified workers. The commercial construction industry’s top concerns are  primarily related to workforce issues, including the lack of available, well-prepared and/or experienced workers to hire.

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:

2019 Construction Survey | 2018 Construction Survey | 2017 Construction Survey | 2016 Construction Survey

2020 Construction Industry Survey

Get the Full Report

2020 Construction Industry SurveyClick below to request a copy of the 2020 Construction Hiring and Business Outlook conducted by Sage and The Associated General Contractors of America (AGC) .

This detailed 12-page report takes a deeper dive into both the opportunities and challenges the construction industry survey respondents expect to experience in 2020 and beyond.

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