The Dodge Construction Network has released its quarterly summary outlook for the civil construction industry, drawing on surveys with contractors and engineers across the United States. The findings reveal a surprisingly optimistic outlook heading into 2023, driven largely by robust project backlogs. For contractors looking to benchmark their own performance, leveraging Construction Data Analytics Project Metrics Performance Benchmarking Predictive tools provides the quantitative foundation needed to navigate both opportunities and headwinds. The survey, conducted from May 2 through May 26, captured a broad cross-section of the industry: 39 percent large contractors (revenues of USD 50 million and above), 35 percent small contractors (under USD 10 million), and 26 percent mid-size firms (USD 10 million to USD 50 million). Geographically, 37 percent were located in the South, 27 percent in the West, 19 percent in the Midwest, and 14 percent in the Northeast.
Backlog Levels and Business Confidence in 2023
The single most important finding from the Dodge report is the strength of contractor backlogs. After two consecutive quarters of growth, backlog levels appear to be leveling off, but they remain near capacity across nearly all firm sizes. Nearly half of all respondents (41 percent) reported that their backlog had increased over the previous six months. Large contractors fared better in this regard, with 47 percent reporting growth, compared with 36 percent of small contractors. Civil engineers, who represent the pipeline of future design and specification work, were even more bullish, reporting current backlogs 50 percent above their ideal levels.
Stephen Jones, senior director of industry insights and research at Dodge Data & Analytics, noted in the report: “The contractors this quarter continue to remain optimistic about the flow of work into the market, and their backlog levels continue to be nearly at capacity. Civil engineers, who represent the pipeline of future work, are even more bullish, reporting current backlogs to be 50 percent over their ideal levels. But the pace of their backlog increases is slightly lower this quarter, suggesting the market may be starting to stabilize.”
Confidence Over Near-Term and Long-Term Horizons
The Dodge survey measured contractor confidence across two time frames: the next 12 months and the next 24 months. The results indicate strong near-term optimism with a gradual tempering over the longer horizon.
- 77 percent of contractors reported high or very high confidence in business conditions for the next 12 months.
- 65 percent reported the same level of confidence for the next 24 months.
- The share of contractors who are highly optimistic about the 24-month outlook grew by four percentage points compared with the previous quarter, indicating growing belief that the strong market will persist.
This pattern of strong near-term confidence and slightly moderated long-term expectations is consistent with an industry that sees a clear pipeline of work but remains cautious about macroeconomic factors that could shift conditions later in 2023 and beyond.
Backlog Trends by Contractor Size
The data reveals meaningful differences in how firms of different sizes experience the current market. Large contractors, with their diversified project portfolios and established relationships, reported stronger backlog growth. Small contractors, while still optimistic, face tighter margins of error in their project pipelines.
| Contractor Size | Revenue Range | Share of Respondents | Reported Backlog Increase | Expecting Revenue Growth |
|---|---|---|---|---|
| Large | USD 50M+ | 39% | 47% | 50% |
| Mid-size | USD 10M – USD 50M | 26% | N/A | 37% |
| Small | Under USD 10M | 35% | 36% | 29% |
The table above summarizes the respondent demographics and key performance indicators broken out by firm size. The data underscores how larger firms are currently capturing a disproportionate share of backlog growth, though smaller firms are also participating in the broader upswing.
Revenue Expectations and Profit Margin Outlook
Revenue expectations across the industry are generally positive, but the data reveals a clear correlation between firm size and revenue optimism. Half of all large contractors expect revenue to increase in the coming year, compared with 37 percent of mid-size firms and 29 percent of small contractors. Most of those who expect higher revenue also anticipate improved profit margins, suggesting that contractors are not merely chasing top-line growth but are actively managing for profitability.
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Factors Driving Lower Revenue Expectations
Contractors who anticipate lower revenue and profit margins in the coming year cited several recurring concerns. The Dodge report ranked these factors by how frequently respondents mentioned them:
- Economic downturn reducing private projects – 60 percent of respondents identified this as a primary concern. The prospect of a recession has not disappeared, and private-sector clients may pull back on capital expenditure if macroeconomic conditions deteriorate.
- Increased competition driving down pricing – 44 percent cited a growing number of competitors bidding on the same projects, compressing margins and making it harder to win work at profitable rates.
- Delays in new projects due to reduced projected public revenue – 29 percent pointed to uncertainty in state and local government budgets, which can slow the release of publicly funded infrastructure projects.
- Insufficient public revenue to support new projects – 21 percent noted that even when projects are planned, the funding may not materialize at the levels needed to sustain current activity.
Factors Driving Higher Revenue Expectations
On the positive side, contractors who expect revenue and margins to rise pointed to a different set of drivers, many of them rooted in the same strong backlog dynamics:
- Expectations of more work – 61 percent of optimistic contractors cited their visible pipeline of upcoming projects as the primary reason for confidence.
- Targeting more profitable work – 61 percent said they are being more selective about which projects they bid, focusing on work that offers better margins.
- Expectation of increased public funding for infrastructure – 55 percent pointed to federal and state infrastructure spending as a tailwind for the industry.
- Expectation of fewer competitors bidding projects – 28 percent believe that market conditions will reduce the number of bidders on their target projects.
- More efficient workforce – 25 percent cited productivity improvements and workforce investments as drivers of better financial performance.
Material Pricing Pressures and Supply Chain Dynamics
Supply chain disruptions and material cost volatility have been defining challenges for the construction industry since the pandemic era, and the Dodge report confirms that these pressures, while easing in some areas, remain a significant concern for civil contractors. As has been the case for several years, the specific materials causing the most acute pain have shifted over time as supply and demand dynamics evolve across different commodity markets.
Shifting Material Cost Concerns
At the start of 2022, contractors were most worried about the price of steel and piping. By the time of the Q3 survey, those concerns had broadened to include pavement and concrete materials, while steel remained a persistent worry. Lumber, which had been a top concern in 2021, dropped significantly on the list of worries, falling from 35 percent of contractors citing it in Q3 of 2021 to just 20 percent in Q3 of 2022.
The Dodge report attributes the easing of lumber prices to broader challenges in the housing market, which reduced demand pressure on wood products. This pattern of shifting material-specific volatility is a reminder that contractors need flexible procurement strategies rather than relying on any single forecast or hedging approach.
Project Impacts and Future Concerns
While the intensity of supply chain impacts has eased since the peak in late 2021, a majority of contractors still report being affected:
- At the end of 2021, 90 percent of contractors were experiencing project impacts due to supply chain issues and material costs.
- By Q3 2022, that figure had dropped to 67 percent, a substantial improvement but still a majority.
- 57 percent of contractors said they remain worried about cost increases in the next six months, down from 61 percent in the prior quarter.
The fact that more than half of contractors still expect further cost increases suggests that the industry has not yet reached a stable equilibrium on materials pricing. Firms that have invested in robust project management systems and data-driven cost tracking are better positioned to weather this ongoing volatility.
Equipment Availability, Costs, and Fleet Strategies
Supply chain disruptions have extended well beyond construction materials to affect construction equipment availability, and this is a growing concern for contractors of all sizes. The Dodge report identifies equipment cost and availability as an emerging pressure point that could constrain project execution in the quarters ahead. For firms that rely on heavy machinery, integrating Equipment Telematics and Fleet Management Gps Tracking Diagnostics into daily operations has become essential for optimizing utilization, scheduling maintenance proactively, and extending equipment life cycles.
Rental Scarcity and Lead Times
Contractors reported that rental equipment is increasingly scarce, and lead times for purchasing new equipment and parts have lengthened significantly. This creates a cascading problem: when a key piece of equipment goes down for maintenance, the replacement options are limited, and waiting for a new machine can delay project timelines by weeks or months.
The Dodge report notes: “Concerns about construction equipment cost continue to grow, with a major spike in the percentage of those concerned between 2021 and 2022. In addition, those concerned about cost increases in the next six months exceed those who have been experiencing cost increases so far. This may suggest that we have not reached the peak of concern about rising prices for construction materials.” While the statement refers specifically to materials, the same logic applies to equipment costs, where forward-looking concern outstrips current experience.
Planned Equipment Spending
Despite the concerns about availability and cost, more than half of survey respondents said they are planning to increase their spending on construction equipment over the next six months. This apparent contradiction makes sense in context: contractors have strong backlogs and high confidence in near-term revenue, so they need equipment to execute projects, even if the purchasing environment is challenging.
Strategies for Managing Equipment Challenges
- Telematics-driven maintenance – Using real-time equipment data to shift from reactive to predictive maintenance, reducing unplanned downtime and extending asset life.
- Fleet right-sizing – Analyzing utilization rates across the fleet to identify underused assets that can be sold or redeployed, freeing capital for higher-priority investments.
- Early ordering and vendor relationships – Building stronger relationships with equipment dealers and placing orders well in advance to secure allocation in tight supply conditions.
- Rental fleet partnerships – Establishing preferred rental agreements with multiple suppliers to improve access when owned equipment is unavailable.
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Bottom Line for Civil Contractors
The Dodge Data & Analytics report paints a picture of an industry that is fundamentally healthy but not without risks. Strong backlogs and high confidence provide a solid foundation, but contractors must navigate persistent material pricing uncertainty, equipment constraints, and the risk of an economic slowdown. The firms best positioned to thrive are those that combine data-driven decision-making, selective bidding, and proactive fleet management to turn market tailwinds into sustainable profitability.