Advice for managing today’s labor and materials challenges
Rising materials costs and a shortage of skilled labor have been persistent challenges for years, and they have become more acute in 2020. Here are some helpful tips and strategies for navigating today’s unpredictable building environment while setting your business up for long-term success.
Mitigating materials issues
A 2018 survey from the National Association of Home Builders (NAHB) found that the rising price of building materials was the biggest problem housing developers faced. As the impact of COVID reverberates through global supply chains, the pricing and availability of building supplies have become even more unpredictable.
Adopting practices that provide your business with greater flexibility is like putting on shock absorbers for the bumpy road ahead. Four flexible practices to consider include:
Escalation clauses: Have a construction attorney draft provisions for your contracts that address adjustments of fees and payments to account for fluctuations in materials and labor costs during projects.
Value engineering: Being adept at the art and science of optimizing the selection of materials to give homeowners the features and performance they desire most is more valuable than ever. Value-engineering expertise is critical for optimizing clients’ budgets.
Supplier communication: Staying in touch with suppliers’ and manufacturers’ reps can alert you to potential supply chain issues and help you discover alternative products and value-engineering options that keep your projects on track.
Supplier bonds: These bonds provide guarantees that a supplier will deliver the materials as promised and help protect you financially if they don’t—another instance when the advice of a construction attorney can be a smart investment.
Solutions for the skilled labor gap.
The shortage of skilled labor also continues to challenge the construction industry. In the first half of 2020, the combination of COVID-related uncertainty and enhanced unemployment benefits furloughed many skilled laborers and then created an odd situation where unemployment benefits temporarily provided more take-home pay than being on the job.
The expiration of those enhanced federal benefits will likely bring many unemployed construction laborers back to the workforce. Plus, it also offers builders an opportunity to attract new people to the building trades.
Among the hardest-hit employment sectors have been retail, restaurants, and other service industries that employ large numbers of younger workers. Many economists project that service industries might never return to pre-COVID employment levels. In addition, the job prospects awaiting someone with a college education are murky. Both scenarios suggest that this is an ideal time to encourage younger workers to consider the attractive pay and job stability of construction and the trades.
However, steady wages are only one part of the labor equation. Workers who only care about their hourly rate will easily be lured away by a competitor. Attracting great workers and keeping them with you for the long term requires more-comprehensive strategies and dedicated commitment to recruiting and retaining great employees.
Apprenticeships and training
Apprenticeship programs remain a proven approach for creating a diverse workforce and attracting people who might not have otherwise considered a career in construction. An apprenticeship program enables you to develop your skilled workers, train them in proper techniques, build loyalty, and expand your potential recruits network. It helps integrate new employees into your company and provides senior employees with opportunities to mentor others and delegate tasks.
Forward-looking firms examine the workstyles, norms, and practices ingrained in their company to identify ways to make their company more inclusive, welcoming, and rewarding for people of different backgrounds.
For example, women are more than half of the US population, yet they currently make up only 3.5 percent of the entire construction workforce. Meanwhile, a US Labor Department study found that nine out of ten women in the construction industry reported sexual harassment incidents. A real commitment to making your company, job sites, and the industry more appealing and hospitable to women can rapidly eliminate the labor shortage problem.
It’s far more productive and cost-effective to keep the skilled employees you already have than to recruit and train new workers. Compensation and healthcare packages are essential for keeping employees on your team today. Still, other benefits such as paid time off, maternity/paternity leave, and formal opportunities for further training, education, and career development are things that help convince people to stay around for the long haul.
Your investments into programs and practices that attract new workers, retain employees, and create a great culture combine into a powerful engine for ensuring you always employ the best talent around. When you put that engine on shock-absorbing strategies for managing materials, your business will be set up to navigate any conditions.