2017 presents great opportunities and equally great challenges for general contractors. The promise of a $1 trillion investment in infrastructure by the new administration gives hope of a decade-long boost to the entire industry. Aside from President Trump’s infrastructure plan, Dodge Data and Analytics is forecasting a 5 percent year-over-year growth — a moderate but positive outlook.
With spring and the building season on the horizon, savvy general contractors are working now to make the most of every opportunity. But even established GCs will have to overcome some tall obstacles to be successful. Here’s a quick look at the top 5 challenges for general contractors in 2017.
The lack of skilled labor has been a significant issue for the last few years. The industry is trying to bring new talent to construction by increasing wages across the board. The average pay rate in construction increased by 3.2 percent over last year compared to an average increase of 2.5 percent for private industry as a whole. Despite efforts to entice new talent, the shortage remains.
Demand is growing, too. In January, an AGC survey of 1,281 contractors revealed that 73 percent of GCs plan to hire new workers in 2017. Those intentions where confirmed as the industry added 36,000 jobs in January and 170,000 in the last year.
The government’s infrastructure investment aside, the labor shortage may hamper industry growth more than any other factor.
Keeping workers safe on the job site is perhaps the greatest challenge for today’s GCs. Second to that is safety compliance. Frequent training and constantly improving safety protocols have proven effective over the last few years. However, the flood of new inexperienced workers onto active construction sites underscores the need for frequent safety training and vigilance by supervisors and project managers.
Fall projection will be a particular concern. As industry regulators move to implement and enforce stricter fall protection codes, training and equipment will become critical to success. The Army Corps of Engineers already requires multiple days of training before workers are approved to work at heights. Look for this requirement to spread throughout the industry in the near future. As it does, firms with trained workers and compliant equipment will be rewarded, while others are running to catch up. AGC of America’s 13 Proven Steps to Improve Construction Worker Safety is a good read for every GC looking to improve their safety routine.
Construction is going high tech, and fast. Building Information Modeling (BIM) software, mobile apps for managing projects in the field and drones that document projects from every angle are a few of the new tech tools streaming into the market. They’re helping project teams move faster and with greater precision. But finding the best solution and deploying it across a small team or large organization requires technical resources and investments of both time and money.
Solving the labor shortage requires bringing in new, usually young, talent. Growing up in the digital age, these new workers usually have better understanding of new technologies and adopt them early. They also lack the skills that only come from years of on-the-job experience. On the other hand, veteran workers have the experience needed to deliver complicated projects quickly and with great precision, but usually lag when it comes to adopting new tech. GCs and project managers that take these qualities into account while planning projects will find themselves ahead of the game.
New building designs are becoming increasingly complex. The finished structures are visually dramatic and energy efficient. But creating these buildings requires experienced tradesmen that can execute quickly and with great precision. Meanwhile, managing project timelines, resources and budgets has also become exponentially more complicated. GCs taking on projects in 2017 will spend more time managing projects that in years past.
While these construction challenges will make delivering projects more difficult, smart GCs who plan accordingly and manage resources will find themselves a step ahead of the rest.