The construction industry’s biggest challenges to growth this year include project delays, shortages of skilled workers and less access to building products and materials. But it isn’t all bad.
Despite the undeniable challenges, the industry has several opportunities for a prosperous year. More contractors are confident the market will offer new business opportunities in next 12 months and have hiring plans that reflect that belief.
And a growing number of contractors expect their profit margins and revenues to increase during the next year.
These are key findings from the U.S. Chamber of Commerce Commercial Construction Index report focused on the fourth quarter of 2020.
The quarterly index polled 207 contractors who work on U.S. projects in the commercial and institutional sectors including the multifamily residential market.
Here’s a summary of the key findings:
Construction Industry Challenges Moving Into 2021
In 2020, nearly all contractors (83 percent) experienced project delays due to the pandemic. An even higher number (85 percent) expect slowdowns to continue for the first few months of this year.
Other survey results around project delays include:
- 71 percent of construction leaders struggled to meet schedule requirements in Q42020– up from 58 percent from the previous quarter
- 26 percent of construction projects were stalled in October 2020
- 27 percent of construction projects are expected to be delayed during Q12021
Luckily there is good news. Experts expect the number of delayed projects to drop from the mid-20s to 18 percent by the time we’re halfway through 2021.
Shortage of skilled workers
The construction industry struggled to find enough skilled labor in 2021.
Though fewer contractors reporting extreme difficulty in securing skilled labor, most contractors (87 percent) still reported moderate to high levels of difficulty in finding skilled workers, and 90 percent said this will worsen in the next six months.
As a result, 58 percent of contractors are putting in higher bids to increase their chances of landing subcontractors.
And, unfortunately, labor is isn’t the only commodity in short supply.
A “severe” consequence of the pandemic, cited by nearly half (41 percent) of construction workers, has been decreased availability of building products and materials. And 71 percent of contractors reported facing at least one material shortage.
Reasons to Feel Upbeat about 2021
While there are many challenges, there’s still much to forward to for the construction industry in 2021 and beyond.
More contractors plan to hire
A growing number of contractors (37 percent) indicate they plan to employ more people, up five points from 32 percent in the 2020 third quarter. And 46 percent expect to keep the same number of workers on staff.
Growing confidence in new business opportunities
Despite ongoing uncertainty, contractors remain cautiously optimistic about their medium to long-term prospects.
Eighty-five percent say they have “moderate to high confidence” that the U.S. market will provide sufficient new business opportunities in the next 12 months. That’s up three points from 82 percent in last year’s third quarter.
More contractors expect higher profits and revenues
The name of the financial game in business, as you’re aware, is generating revenues and profits.
The good news?
More contractors (20 percent) expect to see profit margins increase over the next year compared with 17 percent in last year’s third quarter. Similarly, one fourth (25 percent) expect their revenue to increase in the next year, a rise from 22 percent in the third quarter of 2020.
It’s not surprising the construction industry has several of challenges to overcome, given the economic disruption of 2020.
But rather than tackle all these problems at once, consider focusing on a few that will help your business start fresh and grow faster.
In that focused frame of mind, you may decide to pour your time and resources into shortening, and ultimately eliminating, project delays and improving the skills of your current employees.
Start by finding out exactly what’s slowing then down. It may not be for reasons you suspect, or the reasons may have changed. Find out for sure.
Upskill your workers
Now may be a great time to evaluate your team and figure out exactly what skills you’re lacking and will need. Once identified, spend the time and money to train them.
Provide training on digital technologies
Of all the training you can do, one of the most valuable will be to educate your workers to be more adept at using digital technologies. These would include automation, accounts payable software, electronic payments, machine learning, data analytics and robotics.
Read more: 5 Factors Construction Leaders Should Consider When Automating Accounts Payable
If it’s not already, your business will use these technologies in the future – and your competitors will too. The more your knowledgeable and versatile your employees become at using them, the more value they’ll deliver to your customers.