RICS Global Construction Monitor, Q1 2021, Americas
- Infrastructure projects are improving quickly in the US.
- Materials costs and skill shortages remain the key obstacles.
- The recovery will be limited by higher material and labour costs.
The RICS Q1 2021 Construction Monitor for the Americas shows that activity is continuing to pick up gradually, with Canada and the US showing strong performances and infrastructure projections picking up sharply in the US.
Residential and Industrial Strength
Looking at industry sentiment around current workloads, the strongest momentum is in the private residential sector, consistent with data that indicates new housing development close to a 15-year high. However, while development in this part of the construction sector is viewed as accelerating through the course of the year, an even bigger uptick is projected in infrastructure, reflecting the ambitious plans being set out by the Biden administration. Workloads are projecting most robustly in the digital and energy segments.
For Canada, infrastructure spending is already showing considerable momentum, viewed as being sustained through the course of 2021 with private residential and non-residential workloads also picking up speed as the macro picture strengthens.
Construction monitor : Material costs and skill shortages
Across the Americas, the cost of materials is constraining activity, which continues to be a global problem. Additionally, a shortage in labour with appropriate skills is adding additional hurdles to the recovery. In both the US and Canada, the problem is particularly pronounced when it comes to skilled trades, while a shortage in quantity surveyors is an added factor.
Tender prices appear likely to continue to be outstripped by costs, though the pressure on profit margins in the construction sector appears to easing. Still, in both cases the US and Canada, the point estimates for tender prices and construction costs demonstrate that higher material and labour costs will limit the extent of any uplift in the market.
That stated, there is evidence that construction firms are learning to work more productively under current pandemic-related restraints, as the estimated average loss to productivity is estimated at less than 8% in both Canada and the US, compared with more than 10% last year.
“Based on the survey conducted by RICS, one thing is vitally clear: infrastructure is key to the future. There are great expectations from the infrastructure sector as the US and Canada plan their recovery and stimulus packages. Negative pressures of soaring steel and lumber prices and political headwinds are also evident. While we discuss infrastructure and the future of the built environment, we must not forget the substantial threat that climate change poses to our communities. As we build to a better tomorrow, quality infrastructure must strive to innovate and create equity in our society.”
Anil Sawhney, Director of the Infrastructure Sector, RICS
“Despite a significant increase in the cost of materials caused by a supply shortage in part due to the year-long border closure, construction in Canada is tracking well, both in private residential construction and on infrastructure projects. The government’s focus on infrastructure has greatly helped to maintain a strong momentum within that sector. What surprises me is the high number (46%) of respondents who reported a difficulty in hiring quantity surveyors. At CIQS, we have been saying for a while now that the quantity surveyor profession is pandemic resistant based on member statistics. This report proves that not only is it pandemic resistant but that it is a profession that offers a semblance of security in an otherwise insecure market.”
Sheila Lennon, CAE, Chief Executive Officer, CIQS
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