How prices have been raised, and what contractors are doing about it.
Supply chain bottlenecks coupled with high materials prices are making it harder than ever for construction to keep building costs low. A combination of various different factors have brought construction costs to a peak. This has led to more difficulty than ever sourcing materials and finding the right people to build them.
What are the problems exactly?
The pandemic and the supply chain
The first is the slowdown in production of goods thanks to COVID-19. The 2020 pandemic is still a problem, over a year later. Delta and Lambda variants are wreaking havoc and proving to be even more contagious. In countries like China, where a lot of goods are made, this had led to factory shutdowns and whole-city lockdowns. What this means is that some products, like doors, aluminum parts, steel, and more, simply aren’t available. Anyone who has ever worked on a building site knows that delays just bring costs up. The overhead stays the same while building simply doesn’t happen.
The labor crunch
Other problems facing contractors involve the labor shortage in the US. As the businesses fully reopen, they need people to get back to work. Unfortunately, many have been affected by the pandemic over the year. Some can’t work because of lost family members, some have weakened immune systems and can’t get vaccinated or work… and of course, over 600,000 Americans dying has decreased the pool of potential workers as well.
Companies are also sweetening the deal to get workers to come in. Some are raising minimum wages, some are offering sign-on bonuses, and some are offering other benefits. Target, the retailer, is offering to pay the costs of associates and undergraduate degrees for employees. As more employers try to make their offerings better, commercial construction contractors have to keep up.
Climate change’s chaotic effects
Perhaps 50, or even 25 years ago, climate change was considered an abstract threat. It would result in rising seawater and make certain places unlivable over the course of several hundred years. What we’ve seen so far has been accelerated. More extreme weather, such as hurricanes, larger wildfires, and droughts, have shaken the global economy. Supply chains are now more at risk due to the changing climate than ever before. Besides the general chaos of extreme weather creating bottlenecks in supply chains, there is the effect on agriculture. More drought and heat waves make it harder to grow plants, and make it harder for the ecology to sustain larger organisms as well. As trees become more difficult to grow sustainably, we can expect to see a steady increase in the price of lumber. Additionally, as food becomes more difficult to farm, there will be more chaos added to the labor and employment market when its prices continually go up.
The aforementioned problems are just what we know now. Hindsight is 2020. Nobody predicted how badly the 2020 pandemic would go. How will the global silicon microchip shortage be affected when large producers start running out of sand?
What are the effects on commercial contractors?
The best will survive
What we are seeing is a sort of winnowing down effect. Professional, high-quality contractors with experience are able to weather these changes. They can make up for price increases by doing high quality work and using existing connections to find ways around supply bottlenecks.
Construction firms that have always worked to be the cheapest on the other hand, will suffer. If your company’s main draw is that you are the cheapest at what you do, then price increases are going to end you.
One way to prevent construction slowdowns is to ensure you always have a workforce. Companies that respect and treat their employees well don’t have the turnover of companies that only care about the bottom line. Companies that wish to retain their workforce can use a few techniques to ensure they keep their employees happy, and on the job.
Respect them. Respecting employee time and needs is a great way to build rapport and ensure loyalty.
Offer improvement incentives. Just like Target, many companies realize that educated employees are more productive. They do better work and can request higher pay.
Foster a company culture of improvement. College degrees are just the start, when employees know their employer wishes to improve what they are capable of, they will do the same for their employer.
As prices of building materials continue upward, we can expect to see savvy contractors use more and more efficient methods. Things like tilt-up construction will be applied to even more building sites, as well as materials recycling. Construction firms that use the circular economy (goods recycled from other construction/demolition sites) will find success more easily.
Tech and automation offer fantastic cost-saving methods. Whether it’s using drones to survey sites and check progress or 3 building models so clients can take virtual tours, tech is a saving grace for saving costs. As technology improves, it’s hard to say what possibilities it will create. We could very well see robots capable of construction work and building within our lifetime.
Keep your costs low with a reliable contractor
If you have a project you need done, make sure to use someone you can trust. Fortunately, Reliable is here for you. Reliable Commercial Construction has been in this business for 35 years. We’ve weathered the storms of the past, and we are ready to adapt to a changing tomorrow. We are a large team of veteran contractors who know the tried and true methods of building efficiently. To ensure we keep costs low and efficiency high, we also keep up to date on the newest cost-saving and efficiency trends. If you want your project built efficiently, cost-effectively, and well, then contact us today.