Survey finds longer lead times and higher costs challenging global construction

Ontario Construction News staff writer

While construction activity continues to increase across many global markets, industry volatility is a growing challenge along with labour shortages, demand exceeding supply, and supply chains disruptions.

Those are the conclusions of the 2022 Construction Market Survey by Turner & Townsend.

“2022 has so far been a year of continued recovery and increasing activity levels for construction markets around the world, however, ongoing supply chain disruptions, worsening skills shortages and surging construction costs are generating some of the most challenging market conditions since the onset of the COVID-19 pandemic,” the survey found.

New challenges are adding to existing pressures including the war in Ukraine, commodity price shocks, surging inflation, and COVID-19 lockdowns impacting Shanghai and Ningbo ports.

“Whilst construction activity levels are currently showing resilience, we are seeing this impact construction projects across the world and may see this weigh on new investment in 2022.”

Supply chain diversification, alternative contracting methods, and changed procurement strategies are some of the strategies that being adopted to try and mitigate risks.

This year the International Construction Market Survey by Turner & Townsed found longer lead times to be the most significant challenge, with most ballooning by more than 5 weeks in the last 12 months.

Also, 90 percent of respondents indicated rising costs of construction had a significant or high impact on the delivery of construction projects. These factors are leading to a significant increase in hot or overheating markets around the world.

Turner & Townsend found 38.6 percent of global markets surveyed were classified as ‘hot’ or ‘overheating’ – where conditions are deemed at risk of acting as a brake on development. This is up from just 10.0 percent in 2021, while the number of ‘cold’ markets fell from six to only one. In 2021, there were no hot or overheating markets in Canada, but in 2022 three Canadian markets, Ottawa, Montreal, and Toronto, are classified as hot or overheating.

In addition, Canadian markets have faced labour shortages further adding to capacity constraints. Globally this was the third major construction challenge for 2022. New socio-cultural trends, such as the so-called “great resignation” and the “great retirement”, have driven the tightening of the labour pool around the world, not just in Canada. To address these challenges, organizations are now becoming more creative to attract new talent including forming strong relationships with sector bodies and training organizations, such as local universities or colleges.

The survey also showed how the economy has shifted, with the top performing sector in 2022 being Industrial manufacturing and distribution. The strength of this industry came from healthy growth in buoyant manufacturing, particularly in pharmaceuticals and advanced manufacturing, and e-commerce. The next strongest segments were residential and social housing, and transportation.

Net zero goals were added as a key challenge in this year’s survey, and while it was ranked in 12th position overall, many respondents mentioned the additional costs and limited resources available to achieve these targets. With Canada’s 2030 emission and 2050 net zero goals, many companies are already starting to create and prioritize their net zero strategies.

Now in its 13th year, Turner & Townsend’s latest International Construction Market Survey (ICMS) brings together information and research from 88 global markets, including five Canadian markets.


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