Construction companies remain consistent in their concern about risk exposure in 2016, with respondents reporting in a new survey that their “risk sentiment” has remained steady at 4.4 on a scale of 1-10 (it was at 4.4 at the end of 2015 as well). The latest “Sterling Risk Sentiment Index” shows that most report improving profit margins, but while they say their concerns about staffing are decreasing, access to adequate numbers of employees continues as the No. 1 business risk.
Businesses were also surveyed about how the current election cycle is affecting their businesses. A majority said “election year uncertainty” was having an impact and most felt that the election of a Republican President would improve their business.
The survey noted other key issues of concern. Financial & cash flow issues saw a significant jump (up 8%), with increased competition and government regulation remaining high.
Highlights from the Summer 2016 Sterling Risk Sentiment Index
Note: Where noted, comparisons are with the December 2015 Sterling Risk Sentiment Index
● The #1 risk issue is remains overwhelmingly staffing, with construction companies struggling to have enough employees to handle projects. But the percentage is at 47 percent, down from 60 percent in Fall 2015 Risk Index. Economic issues ranked a distant second at 20 percent.
● Staffing again was the issue companies reported they felt least prepared to deal with right now (30 percent). Health care costs were next (15 percent), followed by cash flow and financial issues (9 percent).
● 64 percent say their company’s exposure for risk is lower than a year ago, a drop from December’s 71 percent.
● 86 percent of respondents say they have formal strategies in place to manage their risk, up from 74 percent in December.
● 75 percent have reviewed their risk management plans in the last 12 months, down from 69 percent.
The new survey also asked construction companies several general questions:
● 80 percent of those surveyed said that they’d see an improvement in their business if a Republican was elected President. Just seven (7) percent said Democrat and ten (10) percent said Libertarian.
● 45 percent said the election year uncertainty affected their businesses. Thirty-seven percent said no and 18 percent didn’t know.
Additional Survey Results
● 84 percent say their profit margins are better today than a year ago
● 88 percent say their pipeline of opportunities is better today than a year ago
● 78 percent say they are able to build adequate contingencies into their project budgets
The Summer 2016 Sterling Risk Sentiment Index surveyed 86 top executives in Atlanta’s construction industry using SurveyMonkey.com. The survey was conducted between July and August 2016.
Related Stories
Market Data | Jan 25, 2018
Renters are the majority in 42 U.S. cities
Over the past 10 years, the number of renters has increased by 23 million.
Market Data | Jan 12, 2018
Construction input prices inch down in December, Up YOY despite low inflation
Energy prices have been more volatile lately.
Market Data | Jan 4, 2018
Nonresidential construction spending ticks higher in November, down year-over-year
Despite the month-over-month expansion, nonresidential spending fell 1.3 percent from November 2016.
Market Data | Dec 14, 2017
ABC chief economist predicts stable 2018 construction economy
There are risks to the 2018 outlook as a number of potential cost increases could come into play.
Market Data | Dec 11, 2017
Global hotel construction pipeline is growing
The Total Pipeline stands at 12,427 Projects/2,084,940 Rooms.
Market Data | Dec 11, 2017
Construction backlog surges, sets record in third quarter
CBI is a leading economic indicator that reflects the amount of construction work under contract, but not yet completed.
Market Data | Dec 7, 2017
Buoyed by healthy economy, ABC Index finds contractors upbeat
Despite rising construction labor and materials costs, 55% of contractors expect their profit margins to expand in the first half of 2018.
Industry Research | Nov 28, 2017
2018 outlook: Economists point to slowdown, AEC professionals say ‘no way’
Multifamily housing and senior living developments head the list of the hottest sectors heading into 2018, according a survey of 356 AEC professionals.
Architects | Nov 28, 2017
Adding value through integrated technology requires a human touch
To help strike that delicate balance between the human and the high-tech, we must first have an in-depth understanding of our client’s needs as well as a manufacturer’s capabilities.
Market Data | Nov 27, 2017
Construction's contribution to U.S. economy highest in seven years
Thirty-seven states benefited from the rise in construction activity in their state, while 13 states experienced a reduction in activity.
