Despite recent forecasts by many economists who predict that 2022 will be a robust year for construction, underlying difficulties persist in the form of labor shortages, supply-chain disruptions and the uncertain effects of ongoing inflation.
“I think that 2022 is going to be a very busy for you all,” said Anirban Basu, chief economist with the Associated Builders and Contractors in his mid-December forecast. But, he cautioned, “think very long and hard before you enter into contractual obligations. Make sure you build enough margin and contingency.”
However, more available work means that hiring qualified people and navigating inflationary price increases will continue to be difficult next year.
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“Demand for construction projects remains high,” says Nathan Wickizer, president, Cache Valley Electric. “Overall, we are bullish in our outlook for 2022 but not without concern. Inflationary pressures and price escalation will cause some owners to pause. Supply-chain issues and lead times also are of concern, and those companies that best mitigate those challenges will be in the best position to lead in 2022.”
In the back of everyone’s mind are the potential impacts of the Infrastructure Investment and Jobs Act, although those projects may take some time to emerge. But even without that added stimulus, the economy is recovering from the worst of the pandemic at a faster pace than many experts had predicted.
“State and local government spending, even without [the infrastructure package], would have been a driver of construction activity,” Basu said. “But now infrastructure factors in on top of those monies, so you should see a lot of state and local spending on construction going forward, including school construction, which stands to be one of the big winners.”
The sunny outlook extends to the regional economy as well. The construction committee with the University of Colorado Boulder’s Leeds Business Research Division estimates a 4% increase in overall construction next year in Colorado, up to $22.9 billion, with growth in all sectors.
“The health of the local economy has been just amazing. Even with all of the fear, labor shortages, supply change demands, restrictions, etc., it is safe to say we couldn’t have imagined this economy a year ago,” says Seth Anderson, CEO, Weifield Group Contracting.
“Weifield continues to work with key clients and has continued to grow even in the face of unprecedented uncertainty. Our company conversations with key leaders in the market all indicate that the Rocky Mountain region is continuing to grow and is staying strong,” he says.