Contractors are, overall, “very optimistic” about their prospects this year—especially those that plan to bid on projects arising from last November’s passage of the Infrastructure Investment and Jobs Act—though significant industry challenges remain, according to the survey report released this month by the Associated General Contractors of America, Arlington, Va., and Sage, Atlanta, “Expecting Growth While Coping with the Lingering Impacts of the Pandemic: The 2022 Construction Hiring & Business Outlook.”

More than 1,000 contractors across the country were surveyed, and respondents were generally upbeat about the available dollar value of projects to bid on in 2022. The percentage of respondents who expect projects’ available dollar value to expand is higher than those who expect it to shrink for 15 of the 17 categories of construction included in the survey.

“This represents a stark turnaround from the 2021 survey, in which contractors were bearish about the prospects for all but a few segments,” the authors wrote. 

Respondents were the most optimistic about highway and bridge construction, followed by transportation projects such as transit, rail and airports, all expected to receive major funding boosts in 2022 and beyond from the bipartisan infrastructure law. Two other segments that are likely to benefit from the new law are federal construction projects and power construction.

The highest expectations among predominantly private-sector categories were for warehouses and healthcare projects such as clinics, testing facilities and medical labs—and the outlook for hospital construction is nearly as favorable. Contractors, on balance, were also optimistic about the construction of apartments and manufacturing facilities, and to a lesser extent, public buildings, K-12 schools, higher education facilities and lodging. Only two categories received negative net readings: retail and private office construction.

“The construction industry is in much better shape overall than a year ago but there is wide variation among companies,” according to the report. “For instance, small contractors, on average, have been slower to recover than larger businesses and are generally less optimistic about the 2022 outlook. While contractors in all regions expect 2022 to be a year of growth in business opportunities and employment, firms in the Northeast are less upbeat than elsewhere.”

While just under half of the respondents expect to increase the number of employees by 10% or less, more than a quarter anticipate larger increases. However, the vast majority said they have been having a hard time filling some or all salaried or hourly craft positions.

A majority of contractors took steps in 2021 to attract and retain workers. For example, 62% increased their base pay rates more than in 2020, compared to 23% that provided similar or smaller increases. Additionally, a third provided incentives or bonuses, and one in five increased their portion of benefit contributions or improved employee benefits.

Other significant challenges exacerbated by the pandemic remain, especially rising material prices and supply chain issues.

More than two out of three respondents have put higher prices into bids or contracts, while 44% have specified longer completion times. Two-thirds have reacted to supply chain problems by accelerating purchases after winning contracts, and nearly as many have turned to alternative suppliers. Almost half have specified alternative materials or products, while nearly a quarter have stockpiled items before winning contracts.

On a more positive note, contractors this year will continue to invest in technology to enhance their operations, according to the survey.

“While the past year has been filled with many challenges, technology has played an integral role in keeping people connected and businesses up and running,” the authors wrote. “Firms are becoming more strategic about IT as they try to remain competitive in the current environment.”

More than half the firms now use cloud-based technology for project management, and nearly as many use the technology for field operations, accounting and time tracking. Specific cloud-based investments for many this year will be for document management, as well as for project management, estimating, tool and asset management, accounting, human resources and fleet management.

The use of mobile software technology is also on the rise for a variety of purposes, including for daily field reports, employee time tracking and the sharing of drawings, photos and documents with project owners, architects, engineers and other contractors on the job.

“The use of information technology, however, continues to pose challenges,” the authors wrote. “Forty-one percent of contractors say it’s difficult to find the time to implement and train on new technology, 39% list keeping company data secure from hackers as one of their biggest IT challenges, and more than a third cite connectivity to remote job sites or communication between field and office as among the biggest IT challenges.”