2015 Sterling Risk Sentiment Index: Indicates Improvement in Risk Exposure Perception in Construction IndustryDecember 03, 2015
Construction companies are growing more optimistic about their risk exposure as they round out 2015, with respondents reporting in a new survey that their “risk sentiment” has dropped to 4.4 on a scale of 1-10 on (down from 5.2 earlier this year). The latest “Sterling Risk Sentiment Index” shows that while profit margins continue to improve, companies are more concerned than ever about staffing, with access to adequate numbers of employees deepening its hold as the No. 1 risk to businesses.
“Sterling’s Risk Sentiment Index clearly shows that most construction contractors continue to see a significant improvement in their perceived risk profile,” said Doug Rieder, Chairman of Sterling Seacrest Partners. “That’s alongside numbers that show a steady uptick in business, consistent or higher margins, and consistent or increased contingencies in their project budgets.”
Rieder also notes: “But with the increase in booked business the issue of staffing pressure becomes even more urgent. In February, 44 percent of construction firms marked that as their top concern, and now that number has risen to 60 percent.”
The survey noted other key issues of concern including economic issues, cash flow issues, HR issues, increased competition and government regulation.
Highlights from the Fall 2015 Sterling Risk Sentiment Index
Note: Where noted, comparisons are with the Feb. 2015 Sterling Risk Sentiment Index
- The #1 risk issue is overwhelmingly staffing, with construction companies struggling to have enough employees to handle projects. 60 percent choose this, up from 44 percent. Economic issues ranked a distant second at 20 percent.
- Staffing again was the issue companies reported they felt least prepared to deal with right now (35%). Health care costs were next (16%), followed by computer hacking (14%).
- 71 percent say their company’s exposure for risk is lower than a year ago, a substantial improvement over February’s 55 percent.
- 74 percent of respondents say they have formal strategies in place to manage their risk, slightly down from 78 percent in February. Half say they don’t have those strategies clearly written down.
- 72 percent have reviewed their risk management plans in the last 12 months, down from 69 percent.
The new survey also asked construction companies several general questions:
- 81 percent said their companies have not benefited from any of the “mega projects” around Atlanta (Falcon’s stadium, Braves’ stadium, major road projects).
- 78 percent said they see their outlook for work with local, state and federal governments remaining at the same level in the 4th quarter of 2015.
The Fall 2015 Sterling Risk Sentiment Index surveyed 84 top executives in Atlanta’s construction industry using SurveyMonkey.com. The survey was conducted between August and September 2015.
Additional Survey Results
- 84 percent say their profit margins are better today than a year ago (unchanged)
- 92 percent say their pipeline of opportunities is better today than a year ago (unchanged)
- 65 percent say they are able to build adequate contingencies into their project budgets (unchanged)
Companies Surveyed Rate Risk at “4.4” on the Sterling Risk Sentiment Index, Improved From “5.2” in February 2015