2021 Construction Risk Sentiment Index

The pandemic economy is affecting the construction industry in both positive and negative ways. The latest “Sterling Seacrest Pritchard Risk Sentiment Index of the Construction Industry,” asked industry leaders to name the top challenges currently facing their businesses. On the positive side, construction leaders are seeing consistent profit margins and more business in their pipelines — but negatively report material costs and delays, as well as staffing challenges, presenting huge hurdles for the construction industry. 

The construction businesses surveyed were mostly mid-sized prime contractors with an annual revenue of more than $10 million. Survey participants were asked to choose three top risk issues for their company. Top concerns included:

  • Staffing (52.8%)
  • Material costs and delays (52.8%)
  • Economic issues (29.2%)
  • Cash Flow (24.7%)

“We found approximately 30% of companies responded to the pandemic by diversifying the type and size of their projects,” said Joey Maxwell, partner at Sterling Seacrest Pritchard. “Others managed their COVID challenges by expanding to new territories, taking on more small projects, decreasing their hiring and staff, and cutting back on their contractors.”

Highlights from the Risk Sentiment Index 

Participating businesses surveyed felt they were least prepared to handle the issues of staffing and material costs and delays. More than half of the companies surveyed (60%) have increased employee compensation in the past year. 

Other findings from the survey include: 

  • 68% of participants are seeing a rebound in available jobs and projects 
  • 76% of participants report the increased price of materials has negatively impacted their bottom line
  • 73% of participants are experiencing project delays

Construction companies were asked how they hoped the Biden administration would affect their businesses. The majority looked forward to construction market support (62%), followed by small business support (51%), and infrastructure build (34%).

The Risk Sentiment Level in 2021 rose slightly from the last survey in 2019 to 4.92 from 4.91. Sterling Seacrest Pritchard launched its Risk Sentiment Index in 2015 to determine how prepared construction companies are to manage their risk. Risk levels peaked in 2015 with a level of 5.15 (on a scale of 1-10). It dropped in 2016 (4.43) but jumped again in 2017 (4.99). 

Methodology: The Sterling Seacrest Pritchard Construction Industry Risk Sentiment Index surveyed 89 top executives in Atlanta’s construction industry using SurveyMonkey.com. The survey was conducted in early 2021.

View the 2019 Construction Risk Sentiment Index results here.

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