New research shows that U.S. subcontractors spent $97 billion more on materials and labor last year than they had planned in 2022, impacting their profitability.
It’s well-known that inflation has driven up the cost of just about everything but the figures from a new study of subcontractor spending puts a hard – and troubling – number on building and construction costs.
According to the third annual National Subcontractor Market Report from Biild, a construction financial support firm based in Austin, TX, subcontractor spending on materials and labor was $97 billion more than planned. The resulting cost increases drove profits down 57% on average for those surveyed, even as top-line revenues grew for 61% of the respondents.
Biild said that the majority of the survey group paid for labor and materials before they were paid, with two and one-half months being the average wait time until they received payment for their jobs.
But the survey reported that nearly two-thirds of those surveyed were expecting their businesses to grow in 2023, though they didn’t necessarily see any relief in operating expenses. One-quarter of the subcontractors who answered the survey, Biild said, reported they were having difficulties getting financing for their projects.
