Survey Suggests Strong 2022 for A/E/C Firms

According to the PSMJ Resources Quarterly Market Forecast, 2022 will be another strong year for A/E/C architecture, engineering, and construction firms in the United States and Canada. All 12 major market sectors surveyed on fourth quarter proposal activity reported solid growth, and among 58 submarkets only office buildings saw a drop in proposal activity during 2021’s final quarter. Overall, the Q4 QMF net plus/minus index (NPMI) of proposal activity growth across all sectors slipped slightly (from 36.5 to 34.6), as shown in the Chart. 

The index for revenue growth among survey respondents fell in Q4, from 43.4 in the third quarter to 15.0. In a recent press release, PSMJ attributed this drop to the resurgence of COVID infections and their related protective measures as well as the slowdown that often occurs during the holidays.

Projections for growth in the first quarter of 2022 drew an index of 45.7 (up from 31.2), while backlog was essentially flat at 39.5, down from 41.5. “Any NPMI above 20 is very good,” said PSMJ Director David Burstein, P.E., AECPM. “For the time being, all signs appear to point to robust activity in the A/E/C markets.”

Among major markets, water/wastewater recorded the highest NPMI at 69.6. Seventy-five percent of respondents reported more than 5% growth in water/wastewater proposal activity, while only 5.4% indicated that opportunities had decreased -- with the rest (19.6%) reporting flat activity. The environmental market (66.7) was second in NPMI, followed by energy/utilities (66.0), housing (59.0), and health care (57.4), as shown in the Table.

Commercial markets, though still among the lowest performers in terms of proposal opportunity growth, showed the greatest quarter-over-quarter increases. The commercial users sector NPMI rose 14.1 points to 43.2, while commercial developers jumped 11.3 to 36.5. Education continued its bounce with the highest year-over-year improvement (up 73.5 to 44.5). Despite the promising outlook Burstein suggests there are some potential headwinds for the A/E/C industry in 2022, including:

• Rising labor costs squeezing profit margins (if fees and revenue fail to also increase).

• Inflationary and supply chain pressures creating more project delays.

• Disruptive technology, which offers abundant opportunities for forward-thinking firms, but that could prove a formidable threat for others.

For more information or to sign up for quarter forecast reports, visit PSMJ’s website.