Civil construction starts this year are expected to total $281 billion in 2023, a 16% jump from last year. This includes projects such as:
- Public transit
- Roads
- Bridges
- EV charging stations
- Water related projects
- Power plants
This increase is due to the infrastructure funds that will steadily flow into the market in 2023. As of July 2022, only a small fraction of IIJA dollars had entered the market.
Construction Dive reports that Dodge Construction Network stated that out of all the IIJA dollars already allocated for projects, 19% has made its way to road and bridge projects, 21% to public transit projects, 15% to EV charging stations and 14% to water infrastructure.
"There's a lot of money still on the table waiting to be spent. We continue to think 2023 and 2024 are the best years for infrastructure construction, though it is possible that timeline could get pushed out by a year."
Chief economist at Dodge Construction Network | Richard Branch
Dodge's forecast assumes that 85% of infrastructure money will be spent by 2027. But, questions remain as to whether the bulk of that activity will begin in 2023 or get pushed out to 2024.
Below are the 2023 outlooks for highway and bridge construction, water-related infrastructure and power plants:
Big year ahead for highway and bridge construction
According to Branch, public funding will continue to support construction activity in the highway and bridge sector. Over the past year, that money started stretching across the U.S.
Highway and bridge construction are projected to jump 20% in 2023 to reach $94.4 billion and $26.6 billion respectively. Together, that is $121 billion worth of activity in the highway and bridge sector in 2023 and will eclipse 2022's level of $100.8 billion.
Environmental public work activity sees no recession concerns
The infrastructure boost will boil over to environmental public works in 2023 as well. That includes water-related infrastructure, such as dams, reservoirs and sewage. Starts in those sectors are expected to total $68.8 billion in 2023, more than a 14% jump from 2022.
Water supply systems will lead work in the sector, with a projected $23.8 billion worth of activity in 2023, a 12% jump from a year ago. Reservoirs and sewage systems closely follow, with about $22.8 billion and $22.2 billion worth of activity in 2023, a 15% and 17% increase from last year according to Dodge.
"If we think about infrastructure and the influence of the federal dollars, we're not expecting much change here due to a recession. A recession would lower the demand for construction workers and put more downward pressure on prices. So, if we were to go into a recession in 2023, it could mean for infrastructure that more real work actually gets done for the dollars allocated."
Chief economist at Dodge Construction Network | Richard Branch
More demand predicted for domestic power and gas plant projects
The Inflation Reduction Act will continue to boost the renewable energy market in 2023, a boon for the power and gas plant sector. The power and gas plants category includes:
- Local utilities
- Wind plants
- Solar plants
- LNG export facilities
These are projected to reach $56.4 billion in 2023, a 7% increase from 2022's level of $52.5 billion.
As more European countries push to wean themselves off of Russian natural gas, those companies would turn to U.S. based LNG projects. For example, LNG production off the coast of Louisiana can support the European Union's goal to end its dependence on Russian fossil fuels according to Jim Bruer, Fluor's Energy Solutions Group president. This should continue to boost activity in the power and gas plant sector well beyond 2023.
