Six of 10 contractor firm respondents said their projects are being delayed because of workforce shortages, according to a survey conducted by the Associated General Contractors of America and Autodesk. In addition, delays due to the lack of approvals or inspectors, or an owner’s directive to halt or redesign a project, were each cited by 30 percent of contractors.
Nearly 90 percent of respondents that are seeking to fill hourly craft positions report having a hard time doing so, and 86 percent seeking to fill salaried positions are also having a hard time hiring.
“Market conditions are nowhere near as robust as they were prior to the onset of the pandemic,” said Ken Simonson, AGC chief economist, in a prepared statement. “At the same time, the pandemic and political responses to it are limiting the size of the workforce, leading to labor shortages that are as severe as they were in 2019 when demand for construction was more robust.”
AGC cited two main reasons so many firms report having trouble finding workers to hire. The first is that 72 percent of firms say available candidates are not qualified to work in the industry due to a lack of skills, failure to pass a drug test, etc. The lack of qualified candidates affects union and open-shop firms almost equally: 70 percent of firms that always use union craft workers exclusively and 74 percent of open-shop firms report a lack of qualified candidates. And 58 percent of respondents report that unemployment insurance supplements are keeping workers away.
As a result of these shortages, almost one-third of firms report they have increased spending on training and professional development. Most firms, 73 percent, report they have increased base pay rates during the past year. And just over one-third of firms have also provided hiring bonuses or incentives during the past year.
In addition, 37 percent of firms report engaging with career-building programs at the high school, collegiate or career and technical levels. Thirty-one percent have added online strategies, such as Instagram Live, to better connect with younger applicants. And roughly 25 percent say they have partnered with government workforce development or unemployment agencies or used software to track job applications.
Many firms have turned to new technologies to become more efficient operators. Fifty-seven percent of respondents report the rate of technology adoption at their firms has increased over the last 12 months. And 60 percent said they anticipate the rate of technology adoption at their firms to increase within the next 12 months.
“Challenges often drive resolve, and we started to see this acutely in the construction industry last year,” said Allison Scott, director of construction thought leadership and customer marketing at Autodesk. “The continued investments in hiring, training and technology highlighted in this year’s study show that even while dealing with ongoing challenges nearly two years into the pandemic, the industry remains committed to building better with a resilient workforce.”
Simonson also said that 88 percent of firms are experiencing project delays. Among these firms, 75 percent cite delays due to longer lead times or shortages of materials, while 57 percent cite delivery delays.
How are supply chain challenges affecting construction projects?
About nine of 10 respondents (93 percent) report that rising materials costs have affected their projects. These rising materials costs are undermining firms’ abilities to profit from the work they have, with 37 percent reporting they have been unsuccessful in passing those added costs onto project owners.
As a result of these supply chain challenges, more than half of firms report having projects canceled, postponed, or scaled back due to increasing costs. Twenty-six percent of firms report their projects have been delayed or canceled because of lengthening or uncertain completion times and 22 percent say changing market conditions have led to project delays or cancellations.
These challenging market conditions are a key reason why 26 percent of respondents expect it will take more than six months for their firm’s revenue to match or exceed year-earlier levels, according to AGC. Another 17 percent are unsure when to expect a return to previous demand levels.
Contractor expectations of recovery vary by region. Forty percent of respondents in the Northeast expect it will take more than six months for their firm’s volume of business to return to normal, compared to only 12 percent of respondents in the Midwest, 22 percent in the West, and 34 percent in the South.
They also vary by project type and revenue size. For instance, 100 percent of building contractors and 97 percent of firms that work on federal government projects report at least some projects were canceled, postponed, or scaled back, compared to 61 percent of utility infrastructure contractors and 56 percent of highway and transportation contractors. Two-thirds of the firms with revenues that exceeded $500 million increased their headcount in the past 12 months, compared to just over half (53 percent) of midsized firms—those with revenues of $50.1 million to $500 million—and slightly more than one-third (36 percent) of firms with revenues of $50 million or less.
Despite these challenges, contractors report as much difficulty filling positions as they experienced before the pandemic. Eighty-nine percent of firms that are seeking to fill hourly craft positions report having a hard time doing so. And 86 percent of firms seeking to fill salaried positions are also having a hard time hiring.
Source: AGC
