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Industry Insight Resources Tips & Advice Ultimate Guide

How Severe is the Construction Industry’s Labor Shortage?

A lack of skilled workers is nothing new to the construction industry. Trade organizations, hiring managers, and small businesses have been complaining that the trades just aren’t attracting young adults anymore, and the current workforce is aging out.

But that labor shortage became even more apparent during the pandemic. With fewer people willing to risk going to work combined with a boom in residential construction, the labor shortage continued to grow. How severe is the issue, and how can it get better? These are the questions the industry should be asking.

How Severe is the Construction Industry’s Labor Shortage?

While the construction industry faced labor shortages in the past (think back to the housing boom of the 2000s), the one it’s facing now is a serious challenge. Estimates show that to keep up with current demand, the US construction industry would have to add 650,000 skilled workers to its ranks. If projections are correct, the current trajectory will require 2.2 million new workers within the next three years just to meet current housing needs.

The Canadian outlook is actually worse. Numbers in Canada require hiring an additional 80,000 workers. Considering population numbers, this is a higher percentage than the issue seen in the US.

What’s causing it?

Retirements

Plain and simple: folks are retiring. The average age of retirement for construction workers in the US is 61 years old. In Canada, the age of retirement across all industries is slightly higher at 64 years old. With over 20 percent of the industry’s workforce being over 55, they’re leaving in droves. 

The pandemic didn’t help. The Great Recession helped many employees find the door, spurring moves to other industries as well as trips to social security offices around the country. 

Lack of Young People

On the opposite end of the spectrum, the interest of young people in entering the construction trade is far too low. According to the US Bureau of Labor Statistics, the 20 to 24-year-old segment made up just 7 percent of the survey respondents working in the construction industry. 

The root cause of this issue is the younger generation’s upbringing that focuses on college and degrees rather than skills or licenses. Instead of construction, this age group is seeking employment in the medical, business/management, and tech or IT fields. 

Market Competition

Even if there wasn’t a housing boom at hand, the industry would be in trouble. Unemployment rates are low, while vacant job numbers are very high, indicating that every industry is facing the same shortage. In this environment, job seekers have options.

Construction employees are leaving job sites for better working conditions in the service or warehouse industries. Those that are staying in construction, they’re able to bounce from employer to employer in search of better pay and better healthcare.

Increased Demand

The pandemic might’ve shut some individual job sites down, but it didn’t slow the construction industry much. Project volumes ballooned with a shift from typical commercial construction to a focus on residential home building. Folks were leaving cities in droves, building new houses, or renovating older ones in the country in order to escape the monotony of struggling cities.

Commercial construction’s direction changed as well. With so many folks staying home and ordering their goods online, fulfillment centers became a precious commodity. Warehouse construction is experiencing a boom in volume without a boom in skilled labor.

What Does This Mean for the Industry?

Ultimately, the labor shortage will have a profound effect on the construction industry. Business owners will need to offset increased costs, and keeping projects on track will seem an impossible task. 

Increased Prices

Construction companies big and small have had to increase the amount they pay their employees over the course of the pandemic. They’ve also had to improve employee benefits to sweeten the deal. The issue is that with already slim profit margins, these companies have had to offload these increased costs of doing business onto customers and project owners.

More Delays

One of the issues of hiring during a labor shortage is that it’s not always possible to find quality employees or vet their experience before hiring. Many projects have gone off the rails in recent history due to poor quality and low productivity. Couple those issues with up to 25 percent of project owners reporting delayed or incomplete deliveries, and delays abound.

Lack of Experienced Leadership

With so much of the experienced workforce hanging up their hardhats, there’s going to be a marked reduction in seasoned leadership. Employers will be forced to promote less experienced employees to foreman or project management positions than they had in the past. While there’s always a learning curve, this lack of experience may cause a ripple effect through the workforce, possibly causing lower productivity, more waste, and more inefficiencies until this group of managers matures.

What Can the Construction Industry Do About the Shortage?

Construction as a whole has been trying to solve the labor shortage issue for a very long time. However, there are a few moves that companies can make to lessen the impact a labor shortage has on the company’s growth.

Consider Improving Wages and Benefits

The modern job seeker has options, and it’s important that companies make their outfit the most attractive. Higher pay than the competition is certainly helpful, but so are better healthcare programs, fringe benefits like childcare reimbursement, tuition assistance, or more days off for time with family. 

These changes may increase younger job seekers’ attention, giving the construction industry a leg up on manufacturing or e-commerce. They can also help one company stand out against the rest. While this will ultimately cost the company more money, it may be one of the only ways to keep a staff full during a continental labor shortage.

Focus on Training

Rather than finding new skilled labor, construction companies can attempt to mold current employees into skilled ones. Investing in tuition or training programs will help employees learn the types of skills that a company can build on. Sending them to specialized schools or setting up programs where senior staff mentors them on their way towards licensure may also be options.

While there is always a risk in training someone only to lose them to another company, consider that it’s possible to invest in a person’s future and create a loyal employee. It also gives employees the feeling that the employer cares—something today’s generation of job seekers is looking for. This can help retain staff rather than let them slip away to competitors offering slightly more money.

Reduce Inefficiencies

Getting more boots on the ground is a challenge that will take long-term planning, so the construction industry needs to focus on finding solutions in the interim. One move that most construction companies could benefit from is reducing inefficiencies through technology.

For example, companies that switch from basic accounting software to construction-specific management software can lower some of their dependence on specific manpower. These software programs are customizable, allowing users to tailor workflows, create custom forms, provide wireless access to current drawings, and track progress through accurate, up-to-date job costing reports.

While technology might not replace skilled labor, it can help make management personnel more efficient. With access to cloud-based drawing storage, site leadership can ensure the crews are working from the most current drawings to prevent mistakes. These folks will also be able to send and receive RFIs and change orders and their approvals from the site, potentially reducing the need to leave for administrative tasks.

Promote Awareness

The construction industry still has a stigma, and it’s preventing younger job seekers from considering it as a potential career path. The idea of it being a low-paying, gruff boys’ club is keeping folks with degrees from joining the ranks of new electricians, carpenters, plumbers, and other trades.

The industry must consider promoting awareness that a career in construction can be a fulfilling and inclusive one. With the potential for promotions, a great living, and competitive benefits, getting the word out that construction could be a viable option for young folks shouldn’t be hard.

Part of promoting awareness may mean shifting the focus from marketing the business to marketing the careers. Senior management may need to partner with local youth organizations and social groups to encourage open dialogue about the industry. Adopting modern media streams like social media, YouTube, and podcasts can help reach younger audiences as well.

None of these tactics will have an immediate impact on the labor shortage, but they can help change the stigma that construction is a dead-end career choice. Young folks who are on the fence about what to do after high school or college may not be considering the industry, and some pointed effort can help. 

The Labor Shortage Isn’t Going Away—Companies Have to Act Now

Ultimately, every industry is feeling the pain of the labor shortage. Construction, however, is particularly affected since it needs skilled workers. It’s important that the industry—and the companies that comprise it—make the moves necessary to attract new employees, retain current ones, and make sure they’re operating as efficiently as possible over the next decade.

Get your business back in financial control amidst the labor shortages. Find out how Premier can empower your business for success.

Schedule a demo today.

Author Biography:

Tom Scalisi has over 15 years of experience working in the trades. Since moving to full-time freelance writing, he has developed a passion for helping construction companies grow. He enjoys teaching contractors how technology can streamline their businesses and educating them about their rights during payment disputes. 

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Industry Insight Tips & Advice Trends & Technology Ultimate Guide

Why is Software Support Critical to the Success of Your Business?

We know that changing financial and project management software can be stressful. The transition is often bumpy and can take several weeks or months to implement. With Premier Software you get the help and support you need throughout the software implementation and use process.

We help ensure that you are getting the most out of your investment and that your team is working at its peak efficiency. Here’s how Premier Construction Software provides you with the support you need to improve your business success.

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Industry Insight Tips & Advice Ultimate Guide

Construction Software: Why Startup Businesses Should Invest

As a startup, one of the most important investments you will make is selecting the right type of software for your construction business. Instead of purchasing multiple systems that only offer partial solutions, it pays to invest in an all-in-one platform that will grow with your company. In this article, we’ll look at what kind of software construction companies need, which software is best for construction companies, and why you should invest in construction software. 

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Features Industry Insight Tips & Advice Ultimate Guide

Are Project Management Solutions Really the Solution?

When shopping for construction project management software, it can be difficult to determine if it’s best to go with a standalone service or an all-in-one that includes accounting. Both have their pluses and minuses, and a lot depends on how you run your business and the size of your staff.  

Premier Construction Software provides an all-in-one solution for your project management, accounting, and financial data needs. And while standalone PM solutions may look attractive, they really create more work than they save. Here are some of the features that Premier provides that standalone products don’t. 

Real-time cost data 

Some standalone project management solutions sync data with the accounting software at the end of the day or when told to manually. So, the data that is represented in the PM solution can be hours or days old. Project managers can’t be sure that they are looking at the latest and greatest information unless they sync the data themselves. 

With Premier, project managers have instant access to all cost and budget data and details as soon as it’s entered. This includes updates to project estimates when budget change orders are approved. The software automatically updates the budget and creates progress billing lines. Project managers can be confident that the information they have, even when accessed on a mobile device in the field, is accurate and up to date. This helps them make better decisions about the project to keep it on schedule and on budget. 

 

Access to all financial data 

Some standalone solutions provide only general information about costs, such as subtotals by cost type or grand totals. Managers can’t drill down into the data specifics because not all the data is shared with the PM solution. 

Premier’s financial data isn’t based on what one program does and doesn’t share with another. All of its information comes directly from the source, allowing project managers to get the information they need, including details and documents. They can look at all costs for a cost code and type and determine if a transaction has been coded correctly, ensuring that costs are properly allocated. Using the forecasting module, PMs can account for unanticipated costs and request internal budget transfers to keep the project on track. 

 

Custom billing forms 

Some solutions provide standard billing forms (like the AIA G702 and 703), but there isn’t much flexibility. Or they only provide templates for generalized invoices. Companies have to create their own invoice templates outside the system to meet their client’s needs. Then that information has to be entered into the accounting software, creating two sources for original data. This double-entry can lead to costly errors. 

Premier’s customized billing forms allow you to design just the form you need to match your client’s requirements. This flexibility allows you to present your billing the way your client wants to see it without adopting a workaround. You only have to enter the data once and have access to all the documents and reports you need to support the billing. Need to make a correction? Instead of a lengthy voiding process, our software allows you to quickly make one-click edits and simple invoice reversals. 

 

Detailed reporting 

Some standalone solutions only receive summary cost data from the accounting system. The export of data doesn’t include detailed information or images of documents to help users research issues. If a problem or question comes up, workers must look at multiple sources to find the information they need. 

Premier offers the ability to drill down to specific transactions and get all the information you need to solve a problem or answer a question in just one platform. Reports can be customized to provide as much, or as little data as is necessary. From generalized summary reports to detailed transaction reports, PMs can get the level of information they need to keep their projects on budget. This allows project managers to quickly get the accurate information they need to manage the project and make key decisions. 

 

Equipment and inventory cost integrations 

Some standalone PM solutions don’t support inventory or equipment cost and revenue tracking. Most companies choose to track these separately in a spreadsheet or by hand as a workaround. This can lead to potential mistakes and inaccurate cost and revenue data. 

Premier’s integrated equipment and inventory modules provide tracking, costing, and purchasing tasks that help ensure the accuracy of billing and cost data. You can track equipment-related expenses and assign mark-ups by the hour, day, week, or month. It also enables you to track historical supplier pricing and assign custom billing prices with custom mark-up codes. This ensures your company gets the revenue it deserves when using its own inventory and equipment and lets you know when it’s time to invest in new equipment or purchase more inventory. 

Automation 

Some PM solutions offer little or no automation of tasks. In addition, because data must be entered into the accounting system and the PM system, they require double the amount of work to keep data accurate in both systems.

Premier allows automation of routine and repetitive tasks, like repetitive invoice entry and automatic pay when paid payments. In addition, when an approved change order is received, the software auto-generates progress billing lines and creates and emails subcontract and purchase order change orders to subcontractors and suppliers. This saves workers time and creates workflow efficiency. 

And now for our verdict…

Premier allows contractors and subcontractors to get the real-time data they need to the level of detail they require, provide custom billing forms, track equipment, and inventory expenses and revenues, and take advantage of automation to increase productivity and efficiency. For more information or a free demo, invest in your business and contact Premier today.

Author Biography:

Dawn Killough is a construction writer with over 20 years of experience with construction payments, from the perspectives of subcontractors and general contractors. Dawn has held roles such as a staff accountant, green building advisor, project assistant, and contract administrator.  Her work for general contractors, design firms, and subcontractors has even led to the publication of blogs on several construction tech websites and her book, Green Building Design 101.

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Tips & Advice Trends & Technology Ultimate Guide

Electronic Approvals: The Key To Improved Synergy

When a construction company finds a way to improve communication and efficiency, it’s taking a step toward serious growth. With everyone in the company having access to the tools to work quickly and automate their most menial tasks, they can expand their possibilities and find job satisfaction. In construction, the synergy electronic approvals promote can be the key to unlocking both these scenarios.

Electronic approvals in construction are all about automating workflow, improving communication, and maximizing efficiency. Everyone benefits from these tools. Let’s find out how.

Electronic Approvals: An Overview

In construction, almost every decision, change, or adjustment requires someone to approve it. In the past, getting approval meant faxing or physically bringing a document to the owner, project manager, designer, or another party for a signature. If there were issues with the proposal or document, the courier would head back to the drawing board, draw up a new document, and track down the signature again. 

Obviously, this is slow, tedious, and inefficient. In a business with thin margins and tight deadlines, moving to an automated method of gathering signatures makes much more sense. Thankfully, we now have the electronic approval.

How Electronic Approvals Work

Electronic approvals serve the same purpose as traditional approvals, yet they benefit from supercharged efficiency. These approvals automatically head directly to the person who needs to review them. They’re often built into documents, allowing the user to open them on a computer or mobile device, sign them, and send them back in real-time. 

To make this process even faster and smoother, system administrators can set up automatic workflows that trigger alerts anytime someone does something that requires approval. And, to drill down even deeper, these administrators can often program which types of decisions need approval. They can opt for or against approvals for budget transfers, change orders, payment applications, compliance acceptances, and a number of other documents and processes. 

The Benefits of Using Electronic Approvals

There are lots of benefits of using electronic approvals. The obvious advantage is speed, but convenience and accuracy should both rank high on the list.

Electronic approvals are fast. Generating themselves automatically, they’re on the way to gathering a signature the moment that an event triggers them. This allows the company to work faster and more efficiently without adding additional staff.

Not only are electronic approvals great for intercompany transactions, they’re also a bonus for customers. Rather than taking time out of their day to head to a fax machine or print, sign, scan, and send a document via email, they can handle the approval from their mobile device. This convenience makes customers more responsive and improves communication.

Accuracy is also a major factor. Whenever there is a human inputting data or drawing up documents, there is potential for a small mistake or oversight. They might even misplace the document or forget to send it (or that they sent it in the first place). With electronic approvals, as long as the contact information is correct, the other party is sure to receive it. And, if they don’t sign it right away, the system can keep track and send reminders and alerts.

Electronic Approvals: Improving Synergy in Every Role

Speed, convenience, communication, and accuracy build synergy, and electronic approvals are no exception. These tools improve the lives of everyone involved in the project, from folks working in the office to the people on-site—even the project owner. Everyone feels the benefits of synergy.

Project Management

Electronic approvals make a massive impact on the way that project management teams perform. As they always seem to be putting out fires, having access to instant approvals on the fly is imperative.

Consider a cost overrun due to a materials shortage. First, the project management team might need to shift the budget from one line item to another, so they’ll need approval from the accounting department. Or, the architect might need to choose a different material, and they’ll need to send a change order to the project owner.

Regardless of the reason, the project management team can send and receive electronic approvals in seconds, allowing the project to move forward and avoid significant delay.

Finance and Accounting

Financing and accounting departments have some critical roles to play, keeping an eye on profitability and ensuring the company has the resources it needs to succeed. And, the type of clarity electronic approvals offers these departments allows them to see the whole picture.

As projects progress, delays, shortages, and changes can take the established budget and turn it on end. With electronic approvals generating automatically, the accounting department will always know where the money is going, who’s moving it, and what for. This improves communication, creates accountability, reduces errors and redundancy, and ultimately protects the company’s profits. 

Field Personnel and Subcontractors

The boots on the ground physically constructing the building benefit from electronic approvals, as well. While these folks might be top-notch problem solvers, they often need the approval of the project management team or designer to move forward.

Let’s envision that there is an issue with the on-site conditions, and the field personnel won’t be able to construct a wall according to the plan. The field personnel can submit an RFI to the architect. This RFI will state the issue and propose a solution, and with electronic approval, give the architect the ability to approve or disapprove in real-time. 

And, one of the most important electronic approvals involves on-site personnel. Modern construction companies often allow subs to submit their pay apps online, saving time and frustration. A few folks within the different departments have to put their eyes on these applications, and each can approve or deny the app with electronic approval. This reduces the amount of time it takes the sub to get paid, making them happier and more willing to work with the construction company again—once again, improving overall synergy.

Project Owners

Some of the most frustrating things for project owners who don’t typically work in the construction space are the constant changes and paperwork. While they might have the architect or designer handling most of the issues, they still need to be available to make some decisions. Often, this means taking time out of their day to meet with contractors to review paperwork.

With electronic approvals, project owners don’t have to feel so overwhelmed. All of the documents they need are at their fingertips. They can quickly provide electronic approval through their mobile device. This can help relieve some of the tension, stress, and confusion that many project owners suffer during the construction process. And, since electronic approvals improve communication, project owners will always feel like they’re in the know.

Automated Workflows and Improved Synergy? Yes, Please

Ultimately, electronic approvals are excellent tools for building a better running, more efficient, more cohesive construction company. They keep everyone in the loop, allow for instant responses and improved communication, and minimize the chances of mistakes or errors. Who wouldn’t want those for the company, employees, projects, and clients?

Check out Premier Construction Software to see if it fits your company’s strategies and goals.  Our construction management and accounting software provide teams with the tools they need to take advantage of these technologies. Schedule a demo by contacting us today.

We’re more than just construction financial software. We’re built to help your business.

Author Biography:

Tom Scalisi has over 15 years of experience working in the trades. Since moving to full-time freelance writing, he has developed a passion for helping construction companies grow. He enjoys teaching contractors how technology can streamline their businesses and educating them about their rights during payment disputes.