The last several years have been a mixed bag for most construction companies operating in Arizona, Nevada and New Mexico. But after tentative improvement in 2011, the following year brought generally better news to the Southwest construction industry. In fact, seven of the top 10 firms responding to ENR Southwest's annual survey of general contractors reported an increase in revenue during 2012 compared with the previous year.

Success May Bring Challenges

Firms operating in many different construction sectors expressed a positive outlook for the year ahead.

Ross Vroman, executive vice president and general manager at the Phoenix office of Skanska USA Building, says, "Dare we be optimistic? Certainly, the building and commercial market has started to show some real signs of health, and there are plenty of opportunities to pursue. Competition is extremely close, however, as this is the moment many contractors and construction managers have been wishing for."

Many firms forecasting increased opportunities in 2013 and beyond, however, are concerned that the pool of available trade workers will continue to shrink.

"A major factor for us, which has been around for a long time, is ensuring that our projects are staffed with highly qualified skilled workers," said Bo Calbert, president of McCarthy Building Cos. Southwest division in Phoenix. "With the loss of so many workers during the economic downturn, because of both immigration laws and many in the industry simply changing careers, we know that we've lost a lot of very good tradespeople."

Ironically, another challenge facing contractors arises from an improving market. "One of the most important factors affecting our firm coming out of the recession is going to be the speed with which subcontractors can grow," says Bryan Dunn, senior vice president, Adolfson & Peterson Construction in Phoenix. "There are typically more subcontractor failures when the markets recover due to a depletion of their cash reserves during a long recession."

Public Sector Woes

While some building sectors continue to show enough improvement for firms to fret over trade worker shortages, the public sector continues to lag behind.

"Overall there seems to be less work coming out, particularly on the public side due to the prolonged lack of funds," says Matt Richards, project executive, Okland Construction. Still, Richards says the outlook for his firm is positive and new hires are continuing.