How Civil Contractors Are Managing the Biggest Challenges They Confront

The latest edition of The Civil Quarterly from Dodge Construction Network shows that despite ongoing labor issues, business conditions are still very strong for civil contractors, with 77% optimistic about the market continuing to be robust for the remainder of 2023, and 46% expecting to see their profit margins increase in the next six months. However, the strong construction market can also exacerbate civil contractor’s ongoing challenges, such as skilled worker shortages and supply chain challenges.

This edition of the TCQ offers new data that reveals how contractors are managing these challenges, including how they are attempting to use technology to improve safety. The report, produced in partnership with Infotech and Hexagon, is based on a quarterly survey of civil contractors and engineers that examines the business conditions that they face and explores key trends in this sector. This quarter, the two unique topics are dealing with uncertainty and data-driven safety. When asked to select their top challenges, civil contractors highlighted four issues in particular: shortage of skilled workers (selected by 72%), higher prices for products and materials (55%), shortages of products and materials (47%), and concerns about an economic recession (39%).

Given the robust state of the market, it is not surprising that an economic recession trailed after the factors that have been increased to acute challenges in the last year, but a potential recession is still clearly on the minds of more than one out of three civil contractors. The biggest strategy to manage two of these challenges – dealing with supply chain issues and the possibility of a recession – is by controlling the one area that is abundant: the large volume of civil projects in the market. The vast majority (83%) will raise prices in their bids on projects to cover the risks of supply chain issues, while most (63%) also intend to be more selective about the projects they choose to bid on to focus on profitability to help them weather the possibility of a recession.

However, raising prices or being more selective about projects are not considered top strategies for managing the ongoing concerns about the skilled worker shortages. Recruitment is instead the top approach. The findings suggest, though, that contractors struggle to know how to respond to this challenge, since no single option for managing it is selected by more than half. The report also offers new data on other strategies for reducing risk and uncertainty on projects in general.

Technology figures importantly in these strategies, with over 70% rating technologies that improve communication and data sharing across the project team as at least moderately useful to reduce risk and over 60% also finding at least moderate value in using technologies that improve data-gathering and analysis on projects. However, the share of contractors using these technologies currently on more than half of their projects (56% and 45%, respectively) is considerably lower than those who believe that they can help to address risk. The study also examined another way that technology can be used to reduce risk: deploying data analysis to help improve safety on projects.

The findings reveal that contractors are just beginning to tap the value of this approach. While 63% of contractors are analyzing data to improve safety, they are split nearly evenly between those who are creating insights to explain what has already happened and those who conduct analysis to help them avoid future hazards and risks. And there is over one third who do not use data analysis to help improve safety. Those who use data analysis are clearly reaping its benefits: 74% report that they are able to better prepare workers to deal with jobsite hazards, 67% report lower recordable injury rates, 60% have increased their ability to reduce the number of hazardous conditions onsite and 57% report fewer near-misses due to the analysis they deploy.

Most of the contractors also expect the industry to use more sophisticated tools involving predictive analytics and artificial intelligence to improve safety in the next three years, although the level of use they expect in the industry far outstrips the use predicted by their own companies. Still, with 47% expecting a moderate to major impact on safety from deploying these tools, it is not surprising that this is the direction that they expect the industry to head in.