The construction industry has been significantly impacted by COVID-19 and has been continually pivoting to adapt to the ongoing shocks from the COVID-19 variants. There has been a perfect storm of concerns in the construction industry including the challenges of hiring construction workers, the huge disruption in logistics and the supply chain, rising costs, resistance to COVID protocols and recommendations and the ongoing uncertainty around us.
Construction costs are expected to keep rising through 2022 mainly due to insufficient materials and labor availability that will constrain the recovery at least through the first half of 2022. U.S Bureau of Labor Statistics data indicates that there has never been a time when so many material costs for construction (steel, lumber, aluminum) have risen so fast simultaneously.
Two persistent challenges that have negatively impacted the construction industry recovery in 2021 will continue post-COVID-19.
Supply-chain delays and record high costs of multiple key building materials will continue to pressure project completion time and profitability.
The COVID-19 variant will significantly slow economic growth with the potential of future waves of the pandemic causing more distress to the recovery.
Persistent logistics backlogs with continued global production and shipping shutdowns because of the COVID-19 variant will restrain the ability of suppliers to catch up with demand. Transportation costs will also increase as production starts up again.
Labor availability will continue to disrupt the post COVID-19 recovery and may be the greatest negative impact on the construction industry and individual contractor’s return to profitability. Unfortunately, the construction labor challenge is expected to get worse next year resulting in rising construction labor costs in 2022.
The huge question regarding the labor market is: how will we fix it post-pandemic? The labor shortage is a global issue for customers due to the concern about not having sufficient labor to fulfill contracts. The most challenging construction craft positions to fill are laborers, carpenters, and heavy equipment operators. Project managers and construction supervisors are the toughest to find for full-time positions. The construction industry will continue to struggle to recruit new entrants into the workforce with the required skills, post-pandemic.
Rising raw material costs are squeezing already slim margins for construction firms. A strategic approach to attack this challenge is needed, such as shifting to manufacturing offsite, rather than building on-site. Expanded use of new technologies to increase efficiency in the project delivery system is also needed.
It will be difficult for companies in the construction industry to be confident in their plans for 2022 and beyond with the far-reaching uncertainty in a post-pandemic world. And yet, there is a golden opportunity for the construction industry to recover from the COVID-driven crisis. NOW is the moment to take an innovative leap forward and tackle the structural issues that have historically held back the construction industry in terms of growth, productivity, and profit margins.
Socrates offers some great advice for the construction industry regarding recovery post COVID-19:
“The secret of change is to focus all of your energy, not on fighting the old, but on building the new.”
Glenn Ebersole is a registered professional engineer and a Strategic Business Development/Marketing Executive and Leader in the AEC industry and related fields. He can be reached at jgepsu21@gmail.com or 717-575-8572.
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November 28, 2021 at 06:32PM
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