state of the industry: Reflection & the Road  to Recovery
Economists, experts & industry insiders on the challenges & trends to watch in 2022

As the world celebrates the joyful beginning of a new year, the construction industry is looking hard to the future and its possibilities. On the heels of the COVID-19 pandemic, much of the industry is hopeful for recovery, but there are multiple roadblocks still creating challenges. While the struggles with materials prices, data points and supply chain issues all continue to wax and wane, there are optimistic signs on the horizon.

With the passage of the Infrastructure Investment and Jobs Act (IIJA), many contractors are keeping a keen eye on how the increased public spending may impact bidding processes, potential for new projects and perhaps even existing contracts across the country.

As the country awaits more news and developments tied to the timelines and futures of these incoming projects, the rest of construction must continue on pace. To provide a snapshot of where the industry stands at this moment in time, economic experts, association leaders and industry professionals are weighing in on what to expect as the we all get to work in 2022.

The following is a roundup of commentary and year-over-year figures from the industry’s top resources. This State of the Industry collection of forecasts for the year ahead will support you as you evaluate and reset your strategies for success in the new year.


Richard BranchDodge Construction Network

Dodge Construction Network’s Chief Economist Richard Branch proposes that the dollar value of construction starts will increase 6% in 2022. While residential construction will continue to play a large role in next year’s growth, Branch suggests a more balanced recovery in the nonresidential sector will begin — particularly as funding from the recently passed infrastructure package begins to enter the market. Alone, the total nonbuilding value forecast of 32.5% year-over-year growth from 2021 to 2026 would instead be 14.9% without the bill’s passing.

There are three main challenges affecting the construction sector in 2022: price, people and productivity.  These will noticeably impact construction starts in 2022.

“All those projects sitting in planning are taking longer to get through, and while construction starts will grow in 2022, that growth is expected to be modest,” said Branch. “It’s clear that if not for the challenges, shortages and prices that we’re currently facing, construction activity would be much stronger than it currently is.” Branch notes that high material costs may not see resolution in 2022. “From an operating perspective, plants are very slowly getting back to normal,” Branch stated. “But we’re still dealing with trucking issues, we’re dealing with port issues, so I think the inflation we’re dealing with here in the construction sector, as it relates to materials and prices, is probably going to last into mid next year before we start to see prices pull back. But even as those prices start to pull back or the inflation slows in the back half of 2022, that level of prices should remain high, at least through the end of next year.” 



Anirban BasuAssociated Builders & Contractors (ABC)

Nonresidential construction employment increased by 20,800 positions on net, with all three subcategories posting gains for the month. Heavy and civil engineering and nonresidential specialty trade added 8,100 and 6,800 jobs, respectively, while nonresidential building employment expanded by 5,900 positions.

The construction unemployment rate rose to 4.7% in November. Unemployment across all industries declined from 4.6% in October to 4.2% last month.

“Today’s jobs report will be viewed by many as a big miss thanks to the headline number, and that is a mistake,” said ABC Chief Economist Anirban Basu. “[A positive indication] from today’s report is that the labor force participation rate rose to 61.8% from 61.6%. While inflationary pressures are generally unpleasant, they may also be inducing more Americans to jump back into the labor force as life has become more expensive. That appears to have happened in November. What’s more, the November figures indicate that ABC’s Construction Confidence Indicator has [delivered] construction employment growth during the latter stages of 2021,” said Basu.

“For the most part, contractors indicate that they remain busy with sufficiently healthy backlog. Accordingly, hiring remains brisk. The expectation is that, during the months to come, a growing number of public construction projects, whether involving roads and bridges, schools, rail or other segments, will begin. In short, nonresidential construction employment growth is poised for ongoing expansion in 2022. “As always, there is uncertainty,” said Basu.


The omicron variant hovers over the economy like a dark cloud. Economists have little idea what the impact of the new variant will be, but there are scenarios suggesting that it could cut growth next year by as much as half. There are also scenarios where there will be no discernible impact. Only time will tell.

What is known is that contractors will continue to struggle to hire, which strongly signals ongoing construction wage pressures throughout the year to come.”


Ken SimonsonAssociated General Contractors of America (AGC)

“It is heartening to see steady job growth across all construction segments following a long period during which only residential contractors were adding employees,” said Ken Simonson, AGC chief economist. “But record job openings show the industry needs still more workers as more types of nonresidential projects get started.” Construction employment in November 2021 totaled 7,533,000, an increase of 31,000 since October and the highest seasonally adjusted figure since March 2020. However, industry employment still trails the pre-pandemic peak of 115,000 positions from February 2020.

Nonresidential construction firms added 20,800 employees in November, following a pickup of 34,600 in October. The category comprises nonresidential building contractors, which added 5,900 employees; specialty trade contractors, with a gain of 6,800 workers; and heavy and civil engineering construction firms, with 8,100 more workers than in October, But nonresidential employment remains 209,000 below the February 2020 level, as the sector has recovered only 67% of the jobs lost in the first 2 months of the pandemic. Visit


Kermit BakerAmerican Institute of Architects (AIA)


“Unlike the economywide payroll figures, architecture services employment has surpassed its pre-pandemic high,” said AIA Chief Economist, Kermit Baker, Hon. AIA, Ph.D. “Staffing continues to be a growing concern at architecture firms and may serve to limit their ability to take on new projects.” Visit

International Risk Management Institute, Inc. (IRMI)

According to its Construction Surety Forecast, IRMI indicates the current insurance market challenges facing construction companies may begin to level off for certain lines of business.

“Prior to the pandemic, we were already seeing increased pressures for additional rate and terms and conditions diminishing, primarily focusing on deductible levels,” said Sedat Kunt, managing director and U.S. construction property placement leader at Marsh. Considerable capacity began leaving the market in 2019, he said. “That exodus from the marketplace started to create a vacuum from a capacity standpoint,” Kunt said. “Then, in March 2020, COVID-19 hits and that considerably contributed to the uncertainty in the marketplace.”

Kunt says many insureds are looking to nontraditional markets to replace capacity, while others are stepping up loss-control activities such as employing electronic surveillance at construction sites, using fire retardants on wood-frame projects, and installing water mitigation systems to prevent water damage.

“It boils down to marketing your project and demonstrating that you’re taking every possible step to make sure that this is going to be a safe and profitable construction project,” Kunt said.

Alternatively in the professional and pollution market, Dawn Gournis, vice president and underwriting manager at AXA XL, said she hasn’t seen as many contractors looking to make limit or coverage reductions to their professional and pollution lines policies. “I more typically see requests for higher limit or enhanced coverage options,” said Gournis.

Kunt noted that with the pandemic pausing or delaying many projects, contractors needed to extend their insurance coverages. As they did so, most experienced coverage reductions or reduced capacity, which created gaps that needed to be filled by other insurers, which contributed to price increases.  “What was happening in 2020 is continuing. The good news is the turmoil that was seen in 2020 is stabilizing to some degree. And there still is ample capacity available for good risks.” Kunt concludes, “The market is leveling itself.” Visit



According to its 2022 Engineering & Construction Industry Outlook, Deloitte forecasts industry growth. Ninety-one percent of engineering and construction executives characterized the business outlook for their industry as somewhat or very positive — 23% higher than last year. Part of this confidence is the expected strong performance of the residential segment and growth from the nonresidential segment due to the $1 trillion Infrastructure Investment and Jobs Act (IIJA).

Conclusions on industry profitability shared that 61% indicated strategic sourcing and category management as areas of investment in 2022. Despite expected supply shortages following the pandemic, construction activities are likely to resume and grow in 2022. In the realm of connected construction, 43% indicated greater investments in new design processes, including information management via data and analytics and to transform the problem-solving approach from reactive to predictive.

In mergers and acquisitions (M&A), the industry could see another strong year from both traditional M&As and ecosystems, with an increase in public-private partnerships — 41% plan to diversify their business to reduce exposure to underperforming segments. Companies will likely look to acquire technologies to help develop a connected, integrated and automated operations foundation.

Finally, facing the industry’s challenges of talent acquisition and retention, Deloitte shares the labor shortage could reach crisis proportions, given that the current situation is expected to continue through 2022. To limit this impact, 60% indicated plans to engage in open talent ecosystems.

In 2022, adapting existing talent strategies and forming new talent management and workforce experience strategies could be critical to navigating the continuous workforce challenges. Visit


Trimble Viewpoint

In a recent survey of its network, Trimble Viewpoint respondents cited that hiring is one of their main concerns in 2022. At the same time, they have positive expectations for 2022 with the majority expecting to have more projects (64%), hire more people (53%), see contract values increase (65%) and spend more cash (57%). The biggest challenges respondents expect to face in 2022 are vaccine mandates/COVID-related safety requirements (35%), hiring challenges/labor shortages (31%), supply chain bottlenecks/material price fluctuations (26%) and technology/workflow and productivity challenges (3%). Respondents think the biggest construction technology trend of 2022 will be data security/cybersecurity (24%), digital technologies that connect workflows and address cost and margin challenges (21%), data accessibility/mobility (18%) and predictive analytics and forecasting/modeling tools (17%). Finally, respondents were the most interested in the industry metrics of labor and hiring (48%), cash flow trends (23%) and project starts/backlogs (22%). Visit

2021 By the Numbers

Supply Chain Issues

According to a December 2021 PwC report, in 2022, the engineering and construction (E&C) sector is well positioned for strong activity in 2022, despite the continued impact on margins by global supply chain disruptions, rising material input costs and labor shortages. The Infrastructure Investment and Jobs Act (IIJA) is expected to propel deal activity in the nonresidential market segment, with a particular emphasis on digital technologies. Mergers & acquisitions (M&A) volume exceeded pre-pandemic levels by 14% across all E&C segments in 2021 and, while overall deal value rose in fiscal 2021, the average deal size decreased compared to fiscal 2020, primarily due to fewer megadeals. This is in addition to a shifting landscape requiring companies to deploy capital on investments that optimize operational efficiencies, deliver cost savings and enhance capabilities in green construction. The Federal Reserve’s decision to scale back and end the pandemic-driven stimulus program by mid-2022 could likely mute growth in the longer term. Visit


Fuel Prices

(averages based on data)


Dec. 7, 2021: $3.349

Dec. 7, 2020: $2.160

Dec. 7, 2019: $2.370



Dec. 7, 2021: $3.616

Dec. 7, 2020: $2.447

Dec. 7, 2019: $3.093


Materials Prices

The cost of materials rose 23% from August 2020 to August 2021. According to a BigRentz survey, the average commercial construction cost in the U.S. is around $490 per square foot.

Lumber prices were particularly volatile throughout the year, hitting a high of $1,500 per 1,000 board feet in April, according to data from Statista. The value recently fell again by around 75% between May and August 2021. Steel prices were also a major concern in 2021, with the projected cost of hot-rolled coil steel prices at $555 per metric ton, up from $482 per metric ton in 2020. The semiconductor chip shortage — affecting construction fleets — is now expected to cost the global automotive industry $210 billion in revenue in 2021, according to consulting firm AlixPartners. Visit


Jobsite Safety

According to Dodge Data & Analytics, the pandemic had a big impact on how safety is approached in the industry. Dodge Construction Network’s Safety Management in the Construction Industry 2021 reported that “more than one in three contractors (35%) increased online training over the past 12 months, and nearly two-thirds (63%) of contractors now use it. More than 75% of the contractors who reported using more online training attributed that growth either partly or completely to COVID-19.  However, while 96% of large employers with 100 or more workers have developed a written plan to protect jobsite workers from the spread of COVID-19, only 57% of employers with less than 20 employees had written plans.” Visit



(based on November 2021 data)

The Bureau of Labor Statistics reports that 183,000 construction workers quit their jobs in September 2021. That’s up from 148,000 in September 2020 but down from 198,000 in July of 2021. Prior to 2020 and the coronavirus pandemic the number of open and unfilled jobs in construction across the country doubled to 300,000 from 2015 to 2019. Visit