Grassi’s 2022 Construction and Architecture & Engineering (A&E) Survey uncovered the latest strategies that general contractors (GCs), subcontractors, architects and engineers are deploying to address price fluctuations, cash flow challenges, labor costs and more.
The findings were released in an authoritative report to help leaders benchmark their businesses, understand today’s risks and discover strategies that drive growth and innovation.
Here are the key takeaways the survey revealed.
Cautious Industry Optimism
Overall, surveyed companies are optimistic about the state of the industry and feel the worst of the pandemic’s financial impact is behind them. A&E firms are especially optimistic that revenue will increase in 2022.
Ongoing challenges call for cautious optimism as the economy continues to lag. The most common challenges reported were supply chain disruptions, inflation and cost increases. Subcontractors and A&E firms have been hit hardest, with around one in four reporting cost increases of 20% or more.
The GC Advantage
The survey emphasized the advantages GCs gain from higher revenues. GCs have the capacity to review cost and profitability more frequently and are also more likely to embrace technology. Almost 90% have invested in technology to streamline operations and improve efficiency, compared to 61% of subcontractors and 75% of A&E firms.
However, many other strategies were embraced just as often, if not more, by subcontractors and/or A&E firms, including:
While different segments have different strategies for dealing with inflation, purchasing ahead is one used by all respondents. GCs are more likely to use purchase agreements and work with customers to accept change orders. Subcontractors are more likely to stockpile. A&E firms’ top strategy is to address project scope creep.
Over half the respondents say their firms are actively looking to invest in technology in the next 12-18 months. Interest in technology solutions (particularly remote work solutions) is exceptionally high among A&E firms.
With increased technology comes increased digital risks. As a result, most respondents have cyber insurance coverage. GCs and A&E firms are more likely to have employee policies to defend against cyber threats, and GCs are more likely to have implemented cybersecurity at remote sites. Subcontractors are more likely to outsource their cybersecurity.
Respondents unsurprisingly ranked financial, supply chain and labor risks as highly significant, but concerns vary by entity. Subcontractors are more likely to identify financial and supply chains as top-three risks. A&E firms are concerned about labor shortages and cybersecurity. Safety is more of a concern for GCs.
Opportunities for Improvement
Among all of the strategies respondents are deploying, there are also untapped or underutilized opportunities.
In the area of technology investment, respondents were most interested in pursuing more collaborative and project management software solutions.
Remote workplaces continue to yield opportunities for improvement, particularly in the area of fraud control. While most respondents feel confident that controls are sufficient to deter fraud in the office, they are less certain of this in their remote environments.
When it comes to harnessing the power of data, A&E firms are less satisfied with the financial and operational information they receive. As automation, AI and other digital tools become increasingly mainstream, this is a highly accessible opportunity to generate more meaningful data to drive their business decisions.
Even as optimism rises, it is clear that the industry has not made a full return to pre-pandemic norms. Remote workplaces, new safety concerns, supply chain disruption and inflationary pressures will continue to create obstacles for construction and A&E firms to navigate. The strategies uncovered in Grassi’s 2022 survey can go a long way toward overcoming them.Tweets by GrassiCPAs