The latest edition of the Ontario Construction Secretariat’s (OCS) annual Contractor Survey finds builders in an optimistic mood as they head into 2024.

OCS released this year’s edition of its 24th Annual State of the Industry and Outlook Conference on March 7. 

One of the survey’s key findings: when asked to reflect on their 2024 outlook for Ontario’s construction industry, two-thirds (66%) of contractors are feeling positive. That figure is down from 81% reported in last year’s survey, but that, says OCS, is likely a function of the fact that 2023 was very busy for most contractors.

Those surveyed reported a number of reasons for optimism for the year ahead, including the large amount of work currently being done and the number of upcoming projects. Some also anticipated a drop in interest rates, which they believed would spur more activity.

The most common reason for a negative outlook, comprising over 20% of the negative open-ended responses, was increasing costs. The most frequent costs mentioned were higher interest rates (noted by almost a fifth), material costs, and high taxes. Other prominent items were labour shortage (16%) and a weak/declining/uncertain economy (12%). Some responses also mentioned government policy and regulation, as well as tight money or a lack of financing.

“There is a massive project pipeline in Ontario that is fuelling positivity about business prospects,” said Robert Bronk, CEO of the OCS. “Power generation, transit and health-care facilities are leading the list of projects currently under construction or slated for construction over the next few years in every region of the province.”

The survey also ranks contractor optimism by region. This year’s edition finds those in Northern Ontario to be most optimistic about their work prospects for 2024, with 31% of respondents saying they expected more business this year than last. That figure compares favourably with the 26% of respondents, province wide, who said they expect more work in 2024.

Least optimistic about new business this year were contractors in Eastern Ontario. Just 21% said they expected more business in 2024. That’s compared with 30% in 2023’s survey, and 38% in the 2022 edition.

As with last year, around 50% of contractors in each region expected the same level of business in 2024.

The survey also found an increase in the percent of contractors expecting less business in 2024 (19% vs 16% from the 2023 survey). Of note was the Eastern region, in which 27% of contractors expected less business compared to 2023.

When it comes to hiring, more than one-third of respondents said they expected to increase their personnel, but nearly two-thirds said they believed accessing skilled labour would be more difficult in 2024.

Almost three-quarters pointed to rising costs as a consequence of skilled labour shortages (up from 63% in last year’s survey), whereas project delays decreased to 52% from 58% last year. Fewer contractors also reported having to turn down work (46% compared to 50%).

The report also asked contractors to rank their top five concerns. Not surprisingly, the Availability of experienced skilled labour was the most significant concern with 48% of contractors assigning it with the highest possible score (5 out of 5), up from 41% in the 2023 survey.

Second tier concerns include: material costs (28%), labour costs (27%), and transportation costs (25%). A greater proportion of contractors assigned the highest score to labour costs and transportation costs when comparing the responses to the 2023 survey.

Looking at the average score, the top 4 concerns remained the same, with availability of experienced skilled labour scoring an average of 4.0, labour and material costs each scoring 3.6, and transportation costs scoring a 3.5.

The report also found that the number of project disruptions appears to be stabilizing. OCS started tracking project cancellations and postponements in response to the COVID-19 pandemic. Consistent with last year’s survey, just over one-third of contractors reported

having projects cancelled by the owner. In terms of postponed projects, 56% of contractors report having projects postponed to a later start date (up modestly from 53% in last year’s survey).

Material cost inflation, interest rates, and labour costs were cited as the most common reasons for project cancellations. While high costs were also noted as the primary reason for project cancellations in the 2023 contractors survey, this year's results suggest that it has become an even greater concern. This is consistent with respondents' primary reasons for a negative outlook and their top concerns.

“Despite a mostly positive outlook for ICI construction in 2024, the rising costs we are all facing remain a concern,” said Bronk. “But it is encouraging that despite this worry, there are still strong expectations for growth and expansion over the coming year, with many contractors implementing new technologies to help create efficiencies and support business success.”

The OCS Contractor Survey polls the province’s institutional, commercial and industrial construction sector to gauge business expectations and present views on salient issues impacting the industry. The survey was conducted via phone interview with 500 contractors between November 2023 and January 2024, including union and non-union companies.