Blog – Construction Sector Analysis and Commentary – August 2023
Summary:
The outlook for US construction of affordable housing is set to change dramatically over the next two years. "Developers see a massive shortage ahead, which threatens to undo the recent progress in closing the daunting affordable housing gap in many US cities," reports Bloomberg.
While interest rates have been increasing, the number of housing projects starting this year has been cut significantly. 2022 projects will typically come online after 18-24 months, therefore construction companies are expecting a severe supply shortage by mid-2025.
This slowdown is supported by statistics from the US Department of Housing and Urban Development (HUD) which received 506 applications as of May, eight months into fiscal year 2023, totalling US$12bn in Federal Housing Administration loans to construct multi-family developments. This is about half the volume of the same eight-month period in FY22 (940 applications for US$22bn) and less than one-third of the volume for the same stretch in FY21 (1739 applications for US$37bn).
The higher costs associated with inflation and rising interest rates are creating financial gaps making it hard for developers to complete below-market rental projects, resulting in significant delays, says Bloomberg.
Single-family construction starts slipped after a four-month run, down seven per cent in June, while applications for permits rose 2.2 per cent from May, according to the Census Bureau and HUD.
Source - https://www.cemnet.com/News/story/175467/us-construction-outlook-is-about-to-change-for-crh-and-others.html
Other links and sources
1. Biodiversity / Construction - https://coastcommunitynews.com.au/central-coast/news/2023/08/biodiversity-overhaul-could-pave-the-way-for-more-housing-construction/
2. CO2 embodying - https://www.linkedin.com/posts/algomaco_california-becomes-first-state-to-adopt-mandatory-activity-7095045267430809600-y2pV/
3. Green Cement - https://environmentjournal.ca/lafarge-canada-pilots-cleantech-project-to-support-sustainable-cement-production/
4. Building codes - https://www.buildinggreen.com/newsbrief/marin-county-first-adopt-low-carbon-concrete-code
5. Energy - https://www.armstrongceilings.com/commercial/en/performance/sustainable-building-design/embodied-carbon-in-buildings.html
6. Climate Change Risks - https://urbanland.uli.org/public/climate-risk-is-financial-risk-the-ever-evolving-landscape-of-climate-related-financial-disclosures/
7. Net Zero - https://www.esmagazine.com/articles/103351-the-path-to-net-zero-buildings-3-steps-to-turn-sustainability-ambition-into-action
8. Ports / Clean - https://www.bnnbloomberg.ca/ports-in-europe-lure-investors-into-clean-energy-gateway-plan-1.1966430
9. Broadband spending - https://ca.news.yahoo.com/broadcom-gives-downbeat-forecast-signaling-221519671.html
10. Construction materials - https://www.marketplace.org/2023/09/01/climate-change-is-making-home-construction-more-expe
Construction Spending and Outlook - The USA and the World - August 2023.pptx
1. INFRASTRUCTURE AND
CONSTRUCTION
SPENDING – THE USA AND
THE WORLD
Paul Young CPA CGA
Senior Customer Success
Manager – Data and AI and
Business Strategist
September 2, 2023
2. PAUL YOUNG – BIO
CPA CGA
SENIOR CUSTOMER SUCCESS MANAGER –
DATA AND AI AND BUSINESS STRATEGIST
• CPA, CGA (1996)
• Academia (PF1, FA4, FN2, MU1. and MS2)
• SME – Customer Success Management
• SME – ESG and Sustainability Reporting &
Policy Development
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Emerging Technology
• SME – Business Process Change
• SME – Financial Solutions
• SME – Macro/Micro Indicators
• SME – Supply Chain Management
• SME – Data, AI, Security, and Platform
• SME – Internal Controls and Auditing
Contact information email: paul.young_cga@outlook.com
LinkedIn: https://www.linkedin.com/in/paul-young-055632b/
3. AGENDA
• Infrastructure
• Construction Spending - USA
• Permits – Canada
• Infrastructure gap
• Supply chain issues
• Monitoring assets and risk mitigation
• Residential financial statements
• Construction company financial statements
• Summary
PRESENTATION TITLE 2/11/20XX 3
4. WE FORUM / FOCUS OF INFRASTRUCTURE
Source - https://www.weforum.org/agenda/2021/01/four-big-infrastructure-trends-for-2021/
PRESENTATION TITLE 2/11/20XX 4
5. GLOBAL INFRASTRUCTURE – ROAD
INFRASTRUCTURE
PRESENTATION TITLE 2/11/20XX 5
Source - https://www.nationmaster.com/nmx/ranking/road-infrastructure-spending
6. WORLD
INFRASTRUCTU
RE SPENDING
• Source -
https://documents.worldbank.org/
en/publication/documents-
reports/documentdetail/97057154
9037261080/hitting-the-trillion-
mark-a-look-at-how-much-
countries-are-spending-on-
infrastructure or
https://www.weforum.org/agenda/
2019/04/infrastructure-gap-heres-
how-to-solve-it/
PRESENTATION TITLE 2/11/20XX 6
8. CHINA AND GLOBAL INFRASTRUCTURE
• China continues to build and finance infrastructure projects in Africa - http://www.sais-cari.org/data-
chinese-contracts-in-africa
• China and the Belt Road - https://www.constructionglobal.com/construction-projects/china-belt-and-road-
initiative-spending-hit-pandemic
• China and developing countries / loans - https://www.reuters.com/article/us-china-emerging-
debt/database-reveals-secrets-of-chinas-loans-to-developing-nations-says-study-idUSKBN2BN0EY
• China and supply chain - https://www.arabnews.com/node/1418636/business-economy
• NATO and China’s control of transportation routes -
https://www.defensenews.com/global/europe/2021/03/04/nato-grapples-with-grasping-chinas-
transportation-clout-in-europe/
PRESENTATION TITLE 2/11/20XX 8
10. INFRASTRUCTURE GAP / UNITED STATES
Source - https://www.mckinsey.com/business-functions/operations/our-insights/reimagining-infrastructure-in-the-united-states-how-to-build-
better#
PRESENTATION TITLE 2/11/20XX 10
11. CONSTRUCTION SPENDING/ UNITED STATES
Source - https://www.mckinsey.com/business-functions/operations/our-insights/reimagining-infrastructure-in-the-united-states-how-to-build-
better#
PRESENTATION TITLE 2/11/20XX 11
12. CONSTRUCTION SPENDING/ UNITED STATES
Source - https://www.mckinsey.com/business-functions/operations/our-insights/reimagining-infrastructure-in-the-united-states-how-to-build-
better#
PRESENTATION TITLE 2/11/20XX 12
13. CONSTRUCTION SPENDING/ UNITED STATES
Source - https://www.mckinsey.com/business-functions/operations/our-insights/reimagining-infrastructure-in-the-united-states-how-to-build-
better#
PRESENTATION TITLE 2/11/20XX 13
14. BUILDING PERMITS/ UNITED STATES
Source - https://www.mckinsey.com/business-functions/operations/our-insights/reimagining-infrastructure-in-the-united-states-how-to-build-
better#
PRESENTATION TITLE 2/11/20XX 14
15. BUILDING PERMITS/ UNITED STATES
Source - https://www.mckinsey.com/business-functions/operations/our-insights/reimagining-infrastructure-in-the-united-states-how-to-build-
better#
PRESENTATION TITLE 2/11/20XX 15
16. BUILDING PERMITS/ CANADA
Source - https://www.mckinsey.com/business-functions/operations/our-insights/reimagining-infrastructure-in-the-united-states-how-to-build-
better#
PRESENTATION TITLE 2/11/20XX 16
17. STATE AND LOCAL GOVERNMENT
INFRASTRUCTURE
Source - https://www.pgpf.org/blog/2020/06/state-and-local-infrastructure-spending-a-closer-look
PRESENTATION TITLE 2/11/20XX 17
19. SUPPLY CHAIN
PRESENTATION TITLE 2/11/20XX 19
Blog – How best to manage your supply chain.
1. Large container ships and emissions - https://www.bloombergquint.com/gadfly/huge-container-ships-biggest-problem-is-emissions
2. Port productivity - https://www.joc.com/port-news/us-ports/tpm21-one%E2%80%99s-nixon-says-us-port-productivity-gaps-mean-
congestion-months_20210302.html
3. Nearshoring - https://investmentmonitor.ai/manufacturing/think-nearshoring-will-bring-back-us-manufacturing-jobs-think-again/
Countries need to be more competitive with their policies in areas of taxation, environment, and other regulatory areas.
4. Data and AI will play a bigger role as part of supply chain management -
https://www.scmr.com/article/the_future_of_supply_chain_management_is_ai_and_data
5. Ability of canal systems to handle the flow of goods - https://www.agcs.allianz.com/news-and-insights/expert-risk-articles/suez-canal-
mega-ships.html
6. Moving supply chain areas from China to manufacturers as part of moving away from China influence - https://www.news-
press.com/story/opinion/2021/03/15/bring-critical-supply-chains-home-biden-china-mineral-markets/4692255001/
7. Standardized ESG reporting including rankings in areas like human rights or environment or other areas – Blog - 10 key ESG and
sustainability trends, ideas for both the Private and Public Sectors - https://www.linkedin.com/posts/paul-young-
055632b_10-key-esg-and-sustainability-trends-ideas-activity-7042799510351212545-
hwpI?utm_source=share&utm_medium=member_desktop
8. Development of new logistic projects like one belt road - https://fortune.com/2021/03/24/china-belt-road-initiative-soft-power/
9. Costs of moving freights - https://www.hellenicshippingnews.com/fbx-index-looking-forward-3/
10. Global inflation - https://www.bloomberg.com/news/articles/2021-03-11/inflation-is-already-creeping-into-some-corners-of-the-world
20. SUPPLY CHAIN RISKS
Here is my work on supply chain - Blog - Strengthening
Sustainable Supply Chains to Lower Emissions -
https://www.linkedin.com/pulse/blog-strengthening-
sustainable-supply-chains-lower-emissions-
young/?trackingId=0fMZE9C8TgCO8T5PLbIIjQ%3D%
3D
Supply Chain Disruption / Suez
The Suez Canal is the latest example of how both the public
and private sectors need to embrace crisis management
including having their crisis management report audited
every year.
https://www.slideshare.net/paulyoungcga/how-to-better-
manage-geopolitical-events
PRESENTATION TITLE 2/11/20XX 20
Source - https://supplychaingamechanger.com/top-10-
global-supply-chain-risks/
21. MONITORING OF INFRASTRUCTURE
ASSETS
PRESENTATION TITLE 2/11/20XX 21
Blog – How best to Identify Climate Risks with Portfolios - https://www.linkedin.com/pulse/blog-how-best-identify-climate-
risks-portfolios-paul-young/?published=t
More monitoring tools - https://community.ibm.com/community/user/communities/community-
home?CommunityKey=3d7261ae-48f7-481d-b675-a40eb407e0fd
Insurance Risk - https://www.thezebra.com/resources/car-insurance/auto-insurance-predictions-2022/
22. BIODIVERSITY / INFRASTRUCTURE
PRESENTATION TITLE 2/11/20XX 22
Blog – Biodiversity – Protecting Wildlife from Traffic and Human through Fending and other Measures –
Municipal and Local Government - https://www.linkedin.com/posts/paul-young-055632b_when-covid-
rules-kept-humans-home-wildlife-activity-7081633458157993984-
PjIf?utm_source=share&utm_medium=member_desktop
https://www.cbc.ca/news/canada/edmonton/animal-movement-gps-study-covid-1.6891448
Biodiversity is key part of ESG and Sustainability Reporting. More needs to be done with public sector
infrastructure including roads and bridges as part of mitigating issues with wildlife and their way of life.
Additional sources and links:
ESG - https://www.slideshare.net/paulyoungcga/introductory-to-esg-and-sustainability-reportingpptx-
257524640
Protection - https://thefurbearers.com/blog/wildlife-fence-on-highway-400-will-save-lives-of-all-species/
25. ESG REPORTING
STANDARDS
PRESENTATION TITLE 2/11/20XX 25
Planning Analytics Community post - https://community.ibm.com/community/user/businessanalytics/discussion/are-you-
ready-for-esg-and-sustainability-reporting-
standards?ReturnUrl=%2fcommunity%2fuser%2fbusinessanalytics%2fcommunities%2fcommunity-
home%2fdigestviewer%3fcommunitykey%3d8fde0600-e22b-4178-acf5-bf4eda43146b
ESG and Sustainability Standards have been finalized (IFRS S1 and IFRS S2). Planning Analytics along with Cognos
Analytics can play a key role with the ingestion of ESG data, especially for scope1, scope 2, and scope 3.
The operational planning cycle will likely include embedding ESG policies as part of the overall budgeting, forecasting,
planning and analysis cycle.
Addressing issues with data management will also play a key role with streamlining the regulatory and operational
reporting cycles.
Blog - First ISSB Reporting Standards Are Out, What Investors and Stakeholders Must Know for ESG and
Sustainability Reporting = https://www.linkedin.com/posts/paul-young-055632b_first-issb-reporting-standards-are-
out-what-activity-7081586781371985920-P0CZ?utm_source=share&utm_medium=member_desktop
26. BIODIVERSITY
PRESENTATION TITLE 2/11/20XX 26
Global biodiversity - Why the proposed changes to Ontario’s Greenbelt matter -
https://www.linkedin.com/pulse/global-biodiversity-why-proposed-changes-ontarios-greenbelt-young
Blog – Rising and Cost of both Wildfires and Forest Fires is leading to more investment in Vegetation and
Forestry Detection Data Services - https://www.linkedin.com/pulse/rising-cost-both-wildfires-forest-fires-
leading-more-investment-paul
Blog – Sector – Public Sector – Hawaii and County of Maui – What is next for the Land -
https://www.linkedin.com/posts/paul-young-055632b_maui-fires-could-disrupt-efforts-to-rebuild-
activity-7097289730895069184-Sm3b?utm_source=share&utm_medium=member_desktop
27. CRISIS, RISK, AND EMERGENCY
MANAGEMENT
PRESENTATION TITLE 2/11/20XX 27
I would also add in the need for all levels of government to have mandator emergency and crisis management
reporting that is tested against geopolitical events. The AG mentions the government was not prepared for pandemic
(https://www.youtube.com/watch?v=d8bx3wWSYbY) as such it makes me wonder if there is a need for annual audits
of all dept/agencies crisis and emergency management plans.
https://www.slideshare.net/paulyoungcga/why-both-the-private-and-public-sectors-need-mandatory-audits-of-crisis-
and-risk-management-reports
Climate change is an issue and always will be an issue. The real key is developing policies that look at all angles of
climate change mitigation!
28. SUMMARY
• Higher material costs continue plague the construction sector
• Cities want more focus on fixing existing infrastructure including roads and bridges
• Addressing issues with water, land, and forest management as part of future urban and rural planning
• Risk and Crisis mitigation plans for wildfires, floods, and other climate events
• Optimization of public transit systems
• Addressing issues with ports, intermodal, warehousing, and other areas as part of addressing issues with the
supply chain
• Streamlining regulations related to development of Oil, LNG, Critical Metals, metals, lumber, cement, and other
products related to the construction sector.
PRESENTATION TITLE 2/11/20XX 28
Blog – Construct
i on Sector Analysis and Commentary – August 2023
Summary:
The outlook for US construction of affordable housing is set to change dramatically over the next
two years. "Developers see a massive shortage ahead, which threatens to undo the recent
progress in closing the daunting affordable housing gap in many US cities," reports Bloomberg.
While interest rates have been increasing, the number of housing projects starting this year has
been cut significantly. 2022 projects will typically come online after 18-24 months, therefore
construction companies are expecting a severe supply shortage by mid-2025.
This slowdown is supported by statistics from the US Department of Housing and Urban
Development (HUD) which received 506 applications as of May, eight months into fiscal year
2023, totalling US$12bn in Federal Housing Administration loans to construct multi-family
developments. This is about half the volume of the same eight-month period in FY22 (940
applications for US$22bn) and less than one-third of the volume for the same stretch in FY21
(1739 applications for US$37bn).
The higher costs associated with inflation and rising interest rates are creating financial gaps
making it hard for developers to complete below-market rental projects, resulting in significant
delays, says Bloomberg.
Single-family construction starts slipped after a four-month run, down seven per cent in June,
while applications for permits rose 2.2 per cent from May, according to the Census Bureau and
HUD.
Source - https://www
.cemnet.com/News/story/175467/us-construct
i on-outlook
-is-about-to-change-for-
crh-and-others.html
Other links and sources
1. Biodiversity / Construct
i on - https://coastcommunitynews.com.au/central-
coast/news/2023/08/biodiversity-overhaul-could-pave-the-way-for-more-housing-construct
i on/
2. CO2 embodying - https://www
.linkedin.com/posts/algomaco_california-becomes-first-state-to-
adopt-mandatory-act
i vity-7095045267430809600-y2pV
/
3. Green Cement - https://environmentjournal.ca/lafarge-canada-pilots-cleantech-project-to-
support-sustainable-cement-product
i on/
4. Building codes - https://www
.buildinggreen.com/newsbrief/marin-county-f
irst-adopt-low-
carbon-concrete-code
5. Energy - https://www
.armstrongceilings.com/commercial/en/performance/sustainable-building-
design/embodied-carbon-in-buildings.html
6. Climate Change Risks - https://urbanland.uli.org/public/climate-risk
-is-financial-risk-the-ever-
evolving-landscape-of-climate-related-financial-disclosures/