Construction contractors face 2015 with a mixture of apprehension and optimism, and with good reason.
The year looks to be full of potential and pitfalls — besides the lingering effects of the 2008 recession, there are state increases in construction contractor bonds, adding to regulatory complexity, and technology security to think about. That is, when companies can even find enough workers to complete projects.
One thing’s for sure — the industry can’t afford to ignore the larger economic and technological trends affecting it. So, let’s take a look at 2015’s top 5 challenges for construction contractors and how you can prepare yourself to tackle them with confidence.
Challenge #1 – Finding The Right Kinds of Workers, and Enough of Them
Perhaps the biggest problem, cited by construction contractors today, is the difficulty in finding and retaining skilled workers. It’s a pervasive issue, which connects to nearly everything else contractors will face in 2015. In spite of new growth, the industry has 20% fewer workers than it did in 2008, a situation reflecting both the effects of the recession and the lack of new workers ready to step into positions opening up now.
Unfortunately, apprenticeship programs designed to address this issue by attracting young talented workers haven’t drawn the level of interest their creators had hoped. In fact, between 2000 and 2010 the average age of a construction worker rose from 37.9 to 40.4 years old. The result has been a dramatic supply-side shift in the industry, with competition for workers driving up project costs. While this is good for workers, it means fewer projects will be completed overall and there’ll be less flexibility within the industry.
One key part of the solution has to be a communal effort to re-brand the industry. Modern construction contractors have to combat old perceptions by convincing a new generation of workers that “It’s Not Backbreaking Work, But a Mind-Bending Career.” This is a tough sell for Millennials, in particular. This kind of industry-wide marketing may not be typical for construction, but it’s going to be a necessity if we want to fix our pervasive worker deficiency.
Challenge #2 – Training Workers for Leadership Positions
Besides recruiting workers, construction contractors are looking at facing the compounding problem of training them for leadership roles. Many of the workers who stayed in the industry following 2008 were older and are now looking at retirement. This means construction firms are facing the loss of their most experienced team leaders, creating an entirely new set of worries in 2015.
Finding a fix here relates back to the “compounding” element of the problem. Without solving the first challenge of recruiting more skilled workers, it’s not possible to develop leaders from within firms. Addressing this issue is all about building up a larger pool of talent from which to train managers and leaders.
Challenge #3 – Incorporating New Technology
Software and communication platforms play an enormous role in modern construction contracting, and can help you discover a problem at the beginning instead of the end of a project, making the difference between a quick fix and a huge drain on your time and efforts. The biggest advances have been with cloud technology and big data analysis, and the way they now allow everyone on a project to easily share and analyze data in real time. But these advances mask the real security concerns of using cloud-based solutions in particular and technology more widely, so make sure to analyze your tech before jumping into it with both feet.
In addition, a perpetual concern over technology is keeping on top of the lightning speed of advances and updates. This necessitates ever-greater time investments into researching and learning to adopt these solutions to keep on the cutting edge. But again, there are tools to help you. Besides the previously mentioned online publications, groups like those on LinkedIn are a great way to combine keeping on top of these advances with great networking. There’s always power in groups, so make use of them to stay informed.
Challenge #4 – Managing Increasing Regulatory Complexity
Ever-increasing regulations are one of the main challenges facing construction contractors today. What this means on the ground is increasing time devoted to compliance and the resulting increased costs. It’s hard to effectively stay on top of these changes as they’re coming from agencies as varied as the EPA, the DOT, OSHA and the NLRB. So how can contractors stay on top of it all?
The first step is being aware of the latest changes by regularly reading blogs and industry publications. You can also join industry groups designed to lobby Washington on behalf of construction contractors around the country. It’s true that this adds up to more work on your part, but if the end result is more industry-friendly policies, then it will be well worth it. The best approach is to incorporate this kind of work into a broader business strategy for 2015.
Challenge #5. Building a Great Business Strategy for 2015
The final major challenge facing construction contractors is building an overall business strategy for 2015. While it’s clear that the difficult times which followed the 2008 financial crisis are gradually fading away, determining how exactly your business should be preparing to take advantage of the current growth is a tough needle to thread. Expand your capacity too much, and you end up wasting resources; don’t expand it enough, and you may not be ready for a big contract when it comes.
There’s no silver bullet here, but lucky for you, if you’re tackling challenges 1–4 you should be well-prepared for building a great overall strategy. The connecting factor here is information.
The Takeaway? It’s All About Information
As a construction contractor in 2015 you simply can’t afford to disconnect from the latest industry news. It’s as simple as that. From incorporating best practices in terms of technology adoption to seeing what kind of marketing is helping to attract young talent, you’ve got to have your finger on the industry’s pulse. So, start reading, participating, and commenting before you’re left behind!
Eric Halsey is a historian by training and disposition who’s been interested in US small businesses since working at the House Committee on Small Business in 2006. Coming from a family with a history of working on industry policy, he has a particular interest in the Surety Bonding industry with a focus on Construction Contracting and loves sharing his knowledge for JW Surety Bonds.
