For many architecture, engineering, and construction (AEC) firms, 2021 was a year of robust growth and record-setting profits… and confidence appears high that 2022 will be another solid year. PSMJ’s latest Quarterly Market Forecast survey of 187 AEC executives (collected between December 20, 2021 and January 3, 2022) revealed a Net Plus/Minus Index (NPMI) value of 34.6. Any NPMI value above zero indicates that more respondents are seeing an increase in proposal activity compared to the prior quarter (+100 indicates all respondents are seeing an increase, -100 indicates all respondents are seeing a decrease).
While the 34.6 NPMI value for overall proposal activity is down slightly from the last survey in September 2021 when it was 37.5, this indicates continued optimism well above the level of just 4.6 for same period one year prior. “Anything above 20 is very good.” stated PSMJ Director David Burstein, P.E., “For the time being, all signs appear to point to robust activity in the AEC markets.”
The Quarterly Market Forecast also measures proposal activity trends in 12 key client markets. As the chart below shows, all 12 of these markets remain firmly entrenched in positive NPMI territory and above their values for the same period one year prior:
The hottest markets (as indicated by delivering the highest NPMI values) are:
1. Water/Wastewater: 69.6
2. Environmental: 66.7
3. Energy/Utilities: 66.0
4. Housing: 59.0
5. Healthcare: 57.4
In reviewing the latest Quarterly Market Forecast survey data, Burstein also comments that there are some potential headwinds for the AEC industry in 2022:
• Rising labor costs will squeeze profit margins if fees and revenue to also increase.
• Inflationary and supply chain pressures could create more project delays.
• Disruptive technology could be an opportunity for the forward-thinking firms and a formidable threat for others.
Of course, there is also much to be unpacked with the recent passage of the Infrastructure Investment and Jobs Act. In one market where we expect to see a notable impact – Transportation – proposal activity is up considerably from the same period in 2020, but it is still relatively flat compared to the September 2021 survey (55.2 in December 2021 compared to a value of 52.8 in the September 2021).
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