What’s Keeping Contractors Up At Night?
According to Associated General Contractors (AGC) of America’s 2023 Construction Outlook National Survey, supply chain snarls and hiring difficulties still top the list of what’s keeping you up at night.
In a recent AGC webinar asking, “What are your biggest concerns for 2023?” respondents ranked these items at the top of the list. Do you agree?
- Economic slowdown/recession
- Material costs
- Insufficient supply of workers or subcontractors
- Rising interest rates/financing costs
- Project delays due to availability/supply chain issues
- Rising direct labor costs, including pay, benefits, and employer taxes
The Bright Spot
Even though the outlook seems grim, there is a bright spot in the Bipartisan Infrastructure Investment and Jobs Act (aka, the Infrastructure Act).
The Act would provide an investment of $110 billion of new funds for roads, bridges, and major projects, and reauthorize the surface transportation program for the next five years. The bill includes a total of $40 billion of new funding for bridge repair, replacement, and rehabilitation, which is the single largest dedicated bridge investment since the construction of the interstate highway system. The bill also includes around $16 billion for major projects that are too large or complex for traditional funding programs but will deliver significant economic benefits to communities.
“This investment will repair and rebuild our roads and bridges with a focus on climate change mitigation, resilience, equity, and safety for all users, including cyclists and pedestrians,” states the White House.
What about inflation?
The Pew Research Center think tank believes the high prices for materials and other inputs are already “sapping jurisdictions’ additional buying power” from the legislation.
With a 20- to 40-percent hike in project costs and materials in some regions, some transportation agencies are scaling back, says Susan Howard, director of policy and government relations at the American Association of State Highway and Transportation Officials.
It’s not all glum.
There has been a decline in construction material costs and supply chains are improving, which eases the burden. So, the extra federal money hasn’t been consumed by inflation…yet.
If you are worried about cash flow for your construction company, work with our experienced tax team to help you identify ways to maximize your tax savings, while increasing cash flow.