By Roland Murphy for AZBEX
In what is quickly becoming a theme in construction-related trend reporting, the newly released Marcum Accountants and Advisors 2024 Construction Survey showcases a generally positive and confident outlook across the industry despite lingering headwinds.
Key findings in the report and its accompanying announcement include a sense of cautious optimism tempered by ongoing economic and political concerns, “particularly in an election year.”
Public sector investment—most notably through the Infrastructure Investment and Jobs Act, CHIPS and Science Act, and Inflation Reduction Act—is expected to continue fueling industry growth. This growth is impeded, however, but the fact that 29% of survey respondents identify the ongoing skilled labor shortage as the greatest threat to their operations.
In a related measure, succession planning is a growing concern, with 49% of respondents saying preparing for leadership transitions is a priority focus.
In general, the survey found an ongoing sense of resilience in the industry, particularly given a significant depth of backlogs and comparatively fewer bidders going after individual project opportunities. A full 65% of respondents reported seeing an average of between one and four other firms competing per opportunity, which Marcum said is the lowest it has seen.
On the challenge side, along with ongoing inflation and elevated capital costs, cybersecurity concerns are posing an increased risk and requiring additional investment in security and procedures.
Tax Incentives – Leaving Money on the Table
All of the points shown above, while relevant and interesting, are frequently covered in other surveys and reports. One item of particular interest from Marcum, an accounting and economic advisory firm, is a focus on tax incentive usage and impacts.
The tax incentive portion of the survey report features detailed commentary from Marcum Partner, Tax & Business / Midwest Construction Industry Group Leader Roger Gingerich, who wrote, “I’m always surprised to see survey results, year after year, showing how few construction company owners are taking full advantage of their tax-saving options.”
The survey listed eight tax incentives available to construction businesses and asked which ones owners were taking advantage of. More than a third, 37%, reported they were not using any tax incentive program opportunities at all. Only one incentive, Accelerated Depreciation/Cost Segregation, scored as high as None of the Above. Pass-Through Entity tax incentive use was next at 27%, Research & Development Tax Credits were reported at 21%, and State and Local Tax Credits were used by 15% of respondents.
Only 5% of respondents took advantage of Energy Investment Tax Credits incentivizing clean energy.
Gingerich wrote, “Of course, very few companies are eligible for all the tax incentives out there, but I’m quite sure these programs are deeply underutilized, particularly in construction. That means you’re probably giving Uncle Sam extra money that could bolster your bottom line.”
The full survey report is available for download here.