Numerous industry reports and surveys estimate constant growth in the construction industry. However, the expansion shows a slight 4.8% increase compared to the double-digit growth in earlier years. Irrespective of that, a sense of optimism still prevails. With a positive outlook and continuous growth in the industry, what issues could be faced by the construction industry?
Top 5 Issues in 2019
Unpaid Work
Finances are one of the main problems facing the industry. Construction executives are responsible and responsible for providing a livelihood to the people who work for them and their families. For this reason, it is significant that their company has a positive cash flow. Unluckily, in many instances, subcontractors end up not receiving the payment for work they have completed. For this reason, subcontractors have filed claims against many owners and general contractors in charge of various major projects.
In most cases, the costs for the project are front-loaded by subcontractors, and their employees and suppliers get paid. However, they must wait for payments from the owners or general contractors, who often dispute the payment even though the work is done.
The problem is that getting billed for the work does not act as proof that the work was completed. Subcontractors must develop practices to ensure they do not end up in a hopeless scenario. The best way to provide irrefutable proof for any payments on claims is to document any job-site issues through notes and photos, document any hours, disruptions, and delays, and have documentation such as change orders, submittals with signed approvals, etc.
Retirement of Baby Boomers
All over the nation, many baby boomers are retiring every day. This statistic is troubling, considering that as much as 54% of construction managers belong to the boomer generation. So, when they retire, they depart all the experience and necessary knowledge they acquired throughout their careers. Construction executives need to find a way to familiarize the young generation of hires with this knowledge, as it can be helpful when there is a shortage of labor. Many construction companies are actively reaching out to improve recruitment into the trades. Some companies are also working on a mentorship program to help dissolve the gap between the boomers and younger workers.
Wide Ranges of technology used by General Contractors
Every time a general contractor uses new technology, the subcontractors are expected to collaborate with the same technology. The problem is that subcontractors deal with numerous general contractors utilizing different software. It can overwhelm subcontractors to learn many solutions to meet their general contractor’s requirements. This arrangement is only beneficial to the general contractors. Using the general contractor’s solutions for project management can be a drawback for subcontractors. This is because the GC owns the system and its files. So, if there is a claim or dispute, the general contractor can revoke the subcontractor’s access and alter information according to their needs.
Unfavorable Terms in Contracts
There is a lot of inherent financial risk regarding construction projects. A huge risk is shifted towards the subcontractor by disjointed interests. More and more subcontractors receive contracts with unfavorable terms, such as warranty coverage, consequential impacts, and liquidated damages. Any deadlines missed can directly impact their wallet. However, many of the delays experienced by subcontractors are due to unforeseen circumstances, and it is often not their fault. For this reason, it is essential to document any schedule changes, lost hours, disruptions, or delays to ensure you are protected against liquidated damages.
Safety
Working at a construction site is inherently risky, making workers’ compensation and insurance a costly outflow. The safety of workers is jeopardized due to unsafe practices. Contractors must ensure that their team follows appropriate safety procedures to reduce risks.
Conclusion
In conclusion, challenges persist while the construction industry sees a moderate 4.8% growth. Unpaid work, generational shifts, tech disparities, unfavorable contracts, and safety concerns demand strategic solutions. Navigating these issues is crucial for sustained progress and prosperity in the ever-evolving construction landscape.
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