As we forge into 2023, contractors face an interesting contradiction. On the one hand, it’s a time of continuing scarcity, thanks to the ongoing pressures of the labor shortage with contractors as well as difficulties with sourcing and the high costs of materials. But it’s also a time of abundance in terms of looming opportunities, with a potential multi-year construction boom on the horizon.
First, the scarcity side of the equation: Most construction firms are still having trouble hiring and retaining the number of talented workers they need to keep up.
According to the AGC’s 2022 Workforce Survey of nearly 1,300 construction firms:
- 93% of construction firms report they have open positions they are trying to fill.
- Among those firms, 91% are having trouble filling at least some of those positions—particularly among the craft workforce that performs the bulk of onsite construction work.
The consequences of those unfilled positions can be steep:
- 82% of firms report projects they work on have been delayed because of supply chain challenges.
- 66% say that projects have been delayed because of labor shortages.
With that are concerns related to the cost and availability of materials. Ongoing supply chain challenges can make it hard to reliably source needed materials. A recent study of 500 builders in the UK found that the price of building materials was their No. 1 concern heading into 2023. Contributing factors include the lingering effects of the pandemic, as well as high energy prices.
And of course, these issues affect not just contractors but their subcontractors as well, creating a ripple effect that multiplies the impact.
A Good Problem to Have: Expanding Opportunities for Growth
Meanwhile, demand and opportunities could possibly grow substantially thanks to the Bipartisan Infrastructure Law, which was signed in November 2021. It calls for an investment of an extra $550 billion over the next decade for a slew of projects that will involve building and modernizing roads, bridges, railways, energy production, and more.
All those projects are expected to add up to 3.2 million jobs, which could result in the construction industry needing as many as 600,000 new workers per year for projects.
The opportunities for new business represent a potential windfall for construction firms, but they also exacerbate the difficulty of rising to the occasion when talented workers are in short supply and the cost and availability of materials can be hard to predict.
Meeting Scarcity with Ingenuity: Two Smart Investments
It’s a natural impulse to respond to scarcity with austerity, but too much cost-cutting and belt-tightening can wind up starving the green shoots you need to nourish, and leave you poorly positioned to take advantage of new opportunities.
Instead, consider tackling the problem by making two smart strategic investments:
- Invest in your workers and a stronger company culture
- Invest in the right technological capabilities
1. Investing in Your Workforce: Retaining a Strong Team
Here are a few ways you can create a “stickier” company by focusing on the needs and goals of your team members.
Community. McKinsey notes that one solution to employees feeling a lack of community is by building a more closely knit team. Creating a buddy system where more experienced workers bond with and mentor new hires can be useful.
Embrace and prioritize diversity in age, gender, and race, including actively recruiting women and the next generation. It’s vitally important to make sure your company feels welcoming to people of all backgrounds.
Incentives. Skilled workers can afford to be choosier about what opportunities they take on right now, so making them feel valued is crucial. Although remote work isn’t an option for most roles in construction, demonstrating a healthy respect for work-life balance is something meaningful that you can offer.
Training and education. This may be the most important incentive of all. Putting an emphasis on education pays off in multiple ways. It not only helps build the confidence, competence, safety, and efficiency of your team—it can build loyalty and help attract talent as well.
Cross-training is a great way to expand the skillset that already lives on your existing team, when you can’t recruit from outside. Talented employees are interested in building their skills so they can keep advancing. Building mentoring and coaching into the fabric of your company culture is another important component.
Perks. This is about signaling to employees that you value them. It doesn’t have to be expensive, but it does need to go beyond lip service and it does need to be proactive. And it needs to feel “extra.”
2. Investing in Transformative Technology: Sharpening Your Toolset with Dynamics 365 Business Central
Getting a modern cloud-based ERP system in place can help you with both the team and the materials side of the scarcity pinch. Microsoft Dynamics 365 Business Central offers tools and features that can increase productivity and visibility where and when you need it most.
For example, centralizing data helps improve communication and efficiency while promoting better collaboration, as all team members have access to the same data. In turn, better data and insights lead to smarter and more agile decision-making.
With the availability of materials less certain, and the increase in lead times, you need better advance planning and visibility so you can address shortfalls with alternative materials and sources.
Business Central can make the process of managing materials more efficient, by providing data that helps you figure out what you’re going to need further in advance, as well as improved visibility into what is and isn’t available, and identifying backup suppliers.
A key part of this is managing and getting better visibility into subcontractors, too. One way Business Central can help is by connecting systems in your office to devices on-site, giving you real-time insight into project progress and timelines. Valuable features include subcontract issuance, managing insurance certificates, and lien releases. Field managers onsite can also have access to subcontractor information to better understand cost, timelines, and more.
Because they are in the same Microsoft ecosystem, Business Central also integrates tightly with Microsoft Teams, which enables stronger collaboration between the main office, field workers, and subcontractors. The tool allows for video conferencing and sharing files such as specifications, drawings, and checklists. And it all ties back into your ERP job tasks, vendor, and customer records.
After all, the more and better data you have in real time, the quicker you can move and the better you can prepare in the case of change. The goal: to keep your team working.
Want to learn more about how Sikich can help you strengthen your business by implementing better and smarter technology? Get in touch with us today.