The Ontario Construction Secretariat released the result of its annual Contractor Survey at its State of the Industry & Outlook Conference on March 5.

The survey, which takes the pulse of the industry’s business outlook for the coming year and monitors critical issues affecting the industry, provides insights on construction activity, skilled labour shortages, and the adoption of new technologies.

About 500 companies from across the province responded to this year’s survey. Two thirds of those were trade contractors; the rest were general contractors.

The 2020 survey found that contractors’ business confidence has gone up this year in every region of the province. Overall, 39 percent of contractors expect to conduct more work this year compared to last, while only 12 percent expect less. This compares to just 33 percent of contractors who expected to see more work in 2019.

Confidence was highest among GTA contractors. Forty-three percent of respondents said they anticipated more work. The same percentage said they expected work to stay the same and 11 percent expected a slowdown.

Among Central Ontario contractors, 38 percent anticipated more work this year, while 17 percent expect less. Outlooks were similar in Eastern and Southwestern Ontario where 37 percent and 36 percent, respectively, expected work to increase this year, and 55 percent and 56 percent, respectively, believed their work levels will remain the same. In Northern Ontario, nearly a third (32 percent) expected to do more work in 2020, while nearly a half (49 percent) expected the same level of work.

Looking at Ontario’s ICI construction industry as a whole rather than their own businesses, 44 percent of respondents said they expected that there will be more construction activity this year, up significantly from 2019 when only 31 percent expected more activity.

Sectoral outlook

The survey looked into which contractors were most optimistic about the sectors in which they principally worked.

Nearly 40 percent of commercial contractors anticipated more commercial work in 2020; just 18 percent expected less. The high-rise residential sectoral outlook is similar. Forty-three percent of contractors expected to do more work this year and 22 percent less. In both cases, this year’s optimism was about 10 percentage points higher than in 2019.

In the institutional sector, 28 percent of contractors said they anticipated more work this year; 26 percent expected less. Among industrial contractors, 26 percent expected more work this year, and 25 percent expected less. The engineering/civil sector was the only sector where contractors forecasted a net decrease in work in 2020. Twenty percent anticipated more work in the sector this year, while 34 percent expected to do less.

Sources of work

Contractors were asked where they expected work to come from in 2020. Not surprisingly, most expected their main source of work to come from bidding opportunities. Contractors estimate that 54 percent of their work will come through bidding, with 46 percent of their work won privately or sole-source.

Respondents said they expected 52 percent of their work to come from new construction projects in 2020, and 48 percent from maintenance work.  Moreover, contractors expected repeat business to account for 73 percent of their work in 2020. Additionally, 83 percent of contractors anticipated working inside their local regions.

Industry challenges

Survey respondents were asked to rank seven challenges according to their potential impact to their businesses this year. Top among concerns were recruiting skilled workers and the aging workforce. About three-quarters (74 percent) of contractors considered recruitment a significant concern, and 57 percent indicated that the aging workforce is a significant concern. Sixty-nine percent (69 percent) of contractors anticipated that getting skilled labour would be more difficult this year than last, while six in ten contractors reported being affected by skilled labour shortages in the past three years.

Additional concerns included the cost and availability of construction materials (39 percent), the province’s political environment (35 percent), keeping up with new technologies (34 percent), green building standards (29 percent), and community benefits (20 percent).

Adopting technology

Ninety percent of contractors now believe that adopting new technologies is important to their firm’s future, up from 71 percent two years ago.

General contractors lead the way in adopting new technologies, with 26 percent now reporting a dedicated budget for new technologies, up from 16 percent in 2018. The percentage of trade contractors with new technology budgets has remained roughly the same at 11 percent.

The survey asked contractors to identify their principal motivators for using new technology. One in three reported that they did so to meet client demands, while one in five said they did so to boost productivity. Reducing costs and gaining a competitive advantage followed closely behind. Just 7 percent said they did so to offer new services to their clients.

When asked to identify the greatest barriers to technology adoption, 30 percent said cost was the biggest restriction. A lack of evidence for return on investment followed at 25 percent, and training requirements at 25 percent.

Drones, augmented and virtual reality, 3D printing, and BIM were among the technologies with the biggest increases in adoption in the industry over the past two years.