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Construction Starts See Surge in December Despite Rate, Credit Concerns The December construction data shows an unexpected surge, indicating optimism in the industry. Despite concerns over rising interest rates limiting lending, construction starts rose 20% from November to a seasonally adjusted annual rate of $1.52 trillion. For cost estimation professionals, this news suggests continued strength in construction demand and a steady flow of new projects to bid on. While higher interest rates may impact affordability for some owners and tighten available credit for others, the overall increased level of activity is a positive indicator for the construction market. The data also points to resilience in the industry. Despite facing potential headwinds, the construction sector has remained buoyant. As long as the overall economy remains steady, demand for new residential and commercial structures appears poised to continue, keeping cost estimators and contractors busy going into the new year. Looking ahead, construction companies should remain cautiously optimistic while monitoring economic conditions and their clients' projects. As long as financing remains available and material costs stabilize, the industry should see continued opportunities for growth. However, any sudden downturns in broader market conditions could threaten certain segments of the construction market. With this in mind, companies should take proactive steps to mitigate risks and position themselves for success in the coming year. This includes: ●Maintaining relationships with key clients and monitoring their financial health ●Diversifying clients across different sectors to reduce concentration risk ●Negotiating fixed-price contracts where possible to limit exposure to material cost volatility ●Pursuing opportunities in recession-resistant construction niches like infrastructure, healthcare, and affordable housing ●Building cash reserves and negotiating flexible credit terms with suppliers to create a financial cushion By staying vigilant and adapting quickly, construction businesses can make the most of the current market strength while preparing for potential challenges on the horizon. With a balanced outlook and a focus on risk management, companies that start 2019 with a plan are best positioned to navigate whatever lies ahead. #constructionptoject #construction #constructionindustry #constructioncompany #constructionnews #constructionestimating #contractor #building #architect #Engineer #projectmanagement #bidding #bidder #sustainability #quality

Construction backlog increases amid easing credit conditions: Confidence in securing new work jumped for the second consecutive month, fuelled by the expectation of rate cuts, according to Associated Builders and Contractors. Construction backlog ticked up to 8.6 months in December due to improving financing availability, according to a Tuesday release from Associated Builders and Contractors. The metric is rebounding from this backlog level, with the lowest point in October since the first quarter of 2022 according to ABC. The increase in December has sparked confidence among contractors, due to two consecutive months now of backlog growth. Additionally, credit conditions eased up at the end of 2023, as the Federal Reserve indicated that their next moves will be to reduce borrowing costs, which will likely trim federal funds rate by the end of 2024. Explore further: #constructionbacklog #constructionindustry #commercialconstruction

“Getting paid on time is a major roadblock in the construction industry, disrupting cash flow for U.S. construction professionals. Only 11% of construction professionals say they are paid in full on every job, and the impacts can be devastating,”. #digitalpayments #paymentprocessing #constructionindustry #finance #paymentsolutions #paymenttechnology

Positive to see an increase in the sector after a difficult start to 2024. "The Purchasing Managers’ Index (PMI) score, derived from the survey data, climbed to 50.2 in March, surpassing February’s 49.7 and marking the highest reading since August of the previous year. A PMI score above 50 indicates expansion in the sector." The homebuilding sector still remains challenging, with many construction firms still citing financial constraints and labour shortages as negative impacts for the year. #construction #insurance #lossadjusting

Projecting the performance of the construction industry has gone from difficult to impossible over the last year. Brent Chambers PG of CapitalPlus Financial Services, provides an analysis of the market, noting that a looming recession, higher costs of funds, labor shortages and resource availability are all creating pressure on the margins for contractors and, by extension, their factors. Read more: https://lnkd.in/ewBXEi-i #commercialfinance #factors #constructionindustry #marketanalysis

Don't miss these challenges if you are preparing a Construction Cost Budget Controlling construction costs in a real estate developer's business can be a challenging task due to various factors in the construction industry. Here are some common challenges faced by real estate developers in managing construction costs: 1)   Additional costs incurred as a result of construction schedule delays caused by extreme weather events and environmental factors 2)   Cost increase due to a sudden change in the project scope and design 3)   Rising interest rates and inflation can have an impact on borrowing costs and construction loan interest rates. 4)   Construction material prices, such as steel, cement, and other materials, can be very volatile due to fluctuations in supply and demand as well as other economic factors. 5)   Additional costs may arise as a result of changes in related laws and regulations, which may require costly adjustments to the construction plans. 6)   When project management and coordination are not strong, it can lead to inefficiencies, delays, and the wasting of resources, ultimately putting pressure on the project's budget. 7)   Delays in obtaining regulatory approvals and permissions for construction projects can lead to cost overruns. 8)   If legal conflicts with contractors, subcontractors, or suppliers are not addressed in a timely and friendly manner, they can result in excessive costs. 9)   The unexpected emergence of a pandemic such as COVID-19 can lead to significant delays in construction, which in turn escalate the overall cost of the project. 10) The construction costs may rise due to delays caused by the main contractors' failure to perform the work as scheduled, often resulting from a sudden change in their financial situation. Real estate developers should apply risk management methods for weather events, define clear project scopes, monitor economic trends, maintain solid supplier connections, and assure good project management to address construction cost concerns. Thanks for reading #CGM6 #realestate #realestatefinance #systemsetting #cfo #startups #constructioncost #ceo  

Nationally, 5.25% of the jobs are in the construction industry, with 7.9. million working in the field. While that is a 3% jump from last year, the study finds that the industry has not fully recovered from the housing crash and the recession that followed. #ConstructionJobs #ConstructionIndustry #ConstructionFinance

Resources can be pretty limited for the construction industry and that makes it hard to keep your finger on the pulse. How are you supposed to know what your peers are doing to stay ahead and how they are feeling about current challenges? We're here to help. We took it upon ourselves to survey top developers and lenders about what their current focuses are, how they are addressing challenges, and what trends they've noticed recently. Check out this year's State of Construction Finance Report to see what your peers are thinking and feeling right now.

https://lnkd.in/e-2bsHfK Dont get me wrong I am pleased that this is happening saving jobs and peoples incomes, continuance of contracts etc but I also know there are lots of firms out there who lost retentions and significant amounts against applications and payment certs. The whole process that MAR had of 45 days after the end of the month the due date fell in - different email boxes for submitting applications - then chasing payment certs up only via the QS mailbox, only being able to resolve with sub contract accounts once the QS had signed off, if an application was not made bang on time it fell into the next due date period really shows how even the construction act can be stretched. Of course it could be that it was only in the last year before entering Administration that everything that could be used was used to lose documentation, delay payments and literally ignore retention releases who knows? Construction News Mark Peyman Richard Stone 🎤 Yosof Ewing Jim Sleith Christopher Albon Thornbury Collection Services Ltd #constructionindustry

Construction output fell 1.9% in February as heavy rainfall dampened construction activity. New work was hit hardest dropping by 2.3% with repair and maintenance decreasing by 1.4% during the month. Despite the uptick in output in January, construction new work output in the last three months to February contracted by a total of 3%. Scott Motley, head of programme, project and cost management at consultant AECOM, said: “The construction industry will be dismayed that output has slipped back into decline, as firms struggle to gather momentum in a sector that hasn’t notched up consecutive months of growth since 2022. “Longer term prospects are improving though, with the Bank of England poised to begin cutting rates – boosting development activity as we enter the warmer months. “However, firms will still need to be alert to persistent challenges – namely elevated labour costs and an increasingly competitive tender market – which are hampering contract delivery while squeezing margins.” Allan Kelly, restructuring advisory partner at accountant FRP, said the latest figures outlined the construction industry’s uncertain state, having posted growth at the very start of the year. “Overall output is heavily linked to the house building sector, which has been subdued by high interest rates for more than 18 months now and continues to act as a drag on performance,” he said. “With the base rate forecast to fall in the coming months, inflation dropping and the government having recently published its long-awaited guidance on second stairways in tall buildings, contractors will be hopeful of a resi-led recovery through the course of the summer. “Insolvency levels are likely to remain high for the foreseeable future though,” he warned. “Trade credit terms have become tougher due to recent collapses, while the winter’s poor weather has held up projects and put a strain on cashflow. “This at a time when the cost of doing business remains elevated and firms continue to work through the effects of previous inflation on contracts. “13-week rolling cashflow forecasts should very much remain the tool of choice for management teams trying to manage order books effectively.” [Construction Enquirer] #construction #cashflow