One of the most widespread challenges reported by specialty contractors in the new report from Dodge Construction and Procore is the growing labor shortage and its effects on projects and productivity. Among specialty contractors surveyed for the report, 90% said their projects have been negatively affected by a shortage of skilled labor.
With an already shrinking workforce and a wave of retirement looming over the next five years, more construction firms are considering technology investments to make the teams they have as effective as possible.
Less experience on site
A lack of skilled workers means that staff on site simply lack the knowledge and experience to perform tasks in the most effective and efficient ways. This creates delays and cost overruns, with rework reported by a third of respondents as a significant contributor to their margin erosion.
More work under an unforgiving schedule means teams must move faster and potentially take shortcuts to minimize delays — which translates into a higher chance of safety issues and quality problems. Thirty nine percent of specialty contractors reported that worker health and safety is being impacted by shortages.
Wave of retirement hits big companies worse
Unfortunately, the trends suggest the shortage is unlikely to end any time soon. In fact, companies reported that a third of their current staff are likely to retire in the next five years. Large companies are more likely to report this level of pending retirement at 39%, versus 26% of smaller companies. This may be because larger firms are more likely to have workers that have been with the company for decades, going from entry level to senior roles.
It’s hard to overstate the impact of such a loss. When a worker retires, someone stepping into their role is unlikely to be a one-to-one replacement. With 30 to 40 years of experience, a retiring employee is taking years of wisdom and institutional knowledge with them.
One countermeasure being deployed by many firms, and which a third report planning to invest further in, is construction technology. Considering the severity of the workforce shortage and the likelihood of it increasing, it’s clearly important to many specialty contractors to optimize the productivity of their current workers.
Investing in tech-powered improvements
Improving productivity can be accomplished across multiple domains of technology investment, but the general idea is that digital tools and platforms make the job easier and faster, especially for the younger generation of workers. Having grown up and worked in a world where high-tech tools are commonplace, these younger team members are more likely both to feel at home using them, and to press for their adoption in the workplace.
Around 40% of larger companies reported being inclined to leverage technology in their efforts to do more with less, compared with 25% of smaller firms. This may be due to the increased resources available to bigger organizations, or reflect a more urgent need to upgrade outdated processes in documentation and communication.
Increase in offsite construction
Previous research by Dodge Data & Analytics has shown that offsite construction is an effective way to optimize a limited labor pool. Offsite construction isn’t just safer and less wasteful of materials, but it can actually benefit both quality and scheduling. Only 23% of small companies currently earn at least half of their revenue through offsite construction, but that is expected to increase sharply over the next year to 35% as investment and accessibility increase.
Every trade surveyed indicated that they plan major increases in this area: plumbing contractors expect the biggest jump, from 35% to 49% looking to receive half their revenue from offsite construction. Steel leads the trend with 58% expecting that revenue share, while concrete contractors understandably still do most of their work on-site. Overall, the trend of investing in offsite construction was nearly universal among respondents.
Workforce management software may soon be standard
Over half of respondents reported using a software solution for workforce management. As noted elsewhere in the report, specialty contractors identified poor resource management and poor client communication as top drivers of rework. The largest companies cited these issues as accounting for half or more of their profit margin erosion.
Workforce management software could prove increasingly important as labor resources dwindle and optimizing the current workforce becomes key. Construction workforce management software can provide visibility into labor resources so specialty contractors can ensure the right people are at the right place at the right time.
The construction industry is globally facing a critical shortage of skilled workers, which has a direct impact on contractors’ individual projects and overall company performance. As a retiring workforce combines with decades-old productivity issues, companies of every trade and size will be affected, and many are seeking solutions to slow or reverse the trend before it removes them from competition.
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