The 2024 first quarter Civil Infrastructure Construction Index (CICI) increased to 55.4 from 52.6, marking the sixth consecutive quarter of anticipated and ongoing sector expansion. Contractors continue to expect that most heavy civil segments will strengthen through the next quarter. Like last quarter (Q4 2023), commercial and residential site development are expected to weaken. Respondents anticipate that public utilities, ports/marine/docks and other civil infrastructure (dams, levees) will be the strongest segments through the end of the year.
Backlog book-to-burn rates improved slightly, led by a slight drop in the share of respondents who recorded decreases. More than half of the respondents indicated that their backlogs are higher this quarter compared to a year ago, and nearly three quarters (70%) said that backlogs are either at or higher than what is needed or anticipated at this point in the year.
A majority (76%) of respondents indicated that margins on work acquired this quarter are the same or better than they were one year ago. A slightly larger share (82%) reported margins were either up or about the same as last quarter.
Despite growing backlogs, contractors surveyed continue to report a competitive market, with nearly three quarters of respondents (72%) citing an increase in competitive pressures. In contrast, 27% indicated similar or decreasing competition, down from 42% last quarter.
Bid prices have climbed again this quarter, with 51% of respondents indicating a slight or significant increase, compared to 63% last quarter. Similarly, there is a small but notable increase in the share of contractors seeing new entrants, with 24% of respondents identifying new nontraditional civil firms entering their markets in the last six months compared to 20% last quarter.
As the competitive environment continues to intensify, a company’s point of view about the future is the first frame of differentiation. It is not that a vision of “being the best in the industry” sets you up for differentiation; rather it is the approach to “how” you become the best that sets you up to be different.
Like football, being successful at differentiation requires strategy and action. It is not static. You need a game plan as a company and as a team. You need to run different plays, depending on risk, project complexity and available talent while also considering who the customer and competitors are. Differentiation is nuanced, situational and multifaceted.
Keep asking yourself:
- Does this add meaningful value to the client, or is it simply an expectation due to the type, size and complexity of the project?
- What do we have to do to ensure that we deliver 100% on our promises?
- How does the customer look at this project/situation differently than we do?
- What can we do to demonstrate our difference and the value it adds?