Tom Scalisi

Tom Scalisi

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.

What the Last Two Years Taught Us to Look Out for in Construction for 2022

The pandemic taught the world a lot of hard lessons over the last two years or so. Without getting into the grim details, a lot of folks lost everything at the hands of a virus. But lessons are designed to teach, and the construction industry was forced to learn. Let’s take a look at what the last two years operating in the construction industry have taught us.

What Happened Over the Last 22 Months in Construction

Realistically, the pandemic had an effect on every industry and it’s changed the way we operate as a global society. However, some of the effects it had on construction are very easy to point out.

A Screeching Halt to Materials Production

When the pandemic started to spread across the globe, one of the first ripples the construction industry felt was a halt in materials production. With people being mandated to stay home and only certain personnel deemed as essential in many countries, factories, quarries, lumber mills, and other links in the materials supply chain shut down. 

And, when materials were available, many shipping and trucking companies were simply unable to move them.

Increased Demand for Contractors

Despite the materials shortage, contractors were busier than ever. With so many folks staying home on vacation and tiring of their surroundings, they began shopping for contractors to undertake renovations. And, as people fled major cities for homes in the country, many of the affordable homes they were purchasing needed a refresh.

A Sharp Spike in Materials Costs

Between the increased demand for contractors and the materials shortage (some of which were brought on by homeowners performing their own renovations), materials prices spiked sharply. In May of 2021, the cost of lumber alone quadrupled. Since May, prices have risen and fallen, but futures are still roughly 2.5 times what they were pre-pandemic. 

A Shortage of People-power

During the pandemic, many folks had to choose between going to work or staying home where they were safer. This caused a shortage of people-power, worsening the construction industry’s already existing deficit of skilled workers. 

Significant Delays

Even with most construction personnel deemed as essential, many construction projects hit significant delays. Between the materials shortages and the added challenges of social distancing, proper PPE, and temperature taking, everything moved slower on site. Even when restrictions started to loosen up, the delays already compounded. These delays cost many contractors, developers, and project owners a lot of money.

No One Knew What to Expect

The last pandemic was a century ago, so no one was sure what to expect. Each day contractors would show up to the job site not knowing which employees would be homesick, which materials would be on time, or which jobs a government agency might shut down for two weeks at a time. This uncertainty caused a lot of anxiety, some of which will have long-lasting effects on the industry. 

What We’ve Learned Two Years Later

It’s not all doom and gloom. If contractors in the industry take the time to learn from these challenges and bolster themselves for the upcoming year, there is potential for a lot of growth. The following are some tips to consider for getting through the next year in construction.

You Need a Plan B.. or C. Maybe Even Plan D.

The pandemic taught us that staying loyal to one supplier is essentially a death sentence. Contractors looking to make the most of the upcoming year need to build relationships with several suppliers. Establishing a rapport and credit lines with new suppliers will pay dividends when materials get short.

Also, make sure the customer knows that there’s a chance their first choice of paint, tile, or other material might not work out. The same applies to their second choice. Maybe even their third. Take the time to line up 3 or 4 contingency products. This will prevent time-consuming change orders down the road.

Pay Attention to Your Contracts

Contractors who take a laid-back approach to their contracts should learn a very important lesson from the pandemic: That language matters.

This year, as contractors are drawing up contracts and signing on the dotted line, they better make sure there’s a clause protecting them from events outside of their control. Excessive materials delays, government-mandated shutdowns, or a general lack of labor because everyone is homesick should afford the contractor more time. 

Keep Employees Happy

In construction, it’s isn’t finding good help that’s hard, it’s keeping it. While competitive pay is still as important as ever, there are two other factors that employers need to consider. 

Employees today recognize the importance of healthcare and sick time, and contractors that want to hold onto the need to provide it. Whether it’s time off for when they’re sick, or time to stay home while their child is quarantined home from school, employees need to know their paychecks are secure. And, should they have to seek healthcare, they need to know it won’t break the bank.

Remember, everyone’s experiencing a shortage of able hands, so treating the ones you have poorly will send them down the street to the next contractor.

Don’t Spread Yourself Too Thin

There are a lot of jobs on the market ripe for the taking. The problem is that many contractors focused on growth will grab too many at one time. While it’s great to have a banner hung on the fence of every job site in town, that type of approach requires a lot of resources.

First, be sure you have the labor to handle the job, which is a feat in and of itself. Next, watch cash flow. Taking too many jobs at once requires a lot of mobilization costs and floating materials, which means a bank account can go from flush to in the negative before a contractor receives their first paychecks. Yes, the jobs are out there, but it’s best to throttle back the go-get-’em attitude a bit for your resources’ sake.

Stay Flexible

The word “nimble” floats around the business world so often that it’s reached buzzword status, but it’s for a reason: a company that’s flexible and quick on its feet has a chance to survive anything. 

The next year is full of uncertainty, so it’s best to stay flexible. Provide office staff with the ability to work from home if needed. Be prepared if new social distancing or PPE guidelines come about. Find those 3 or 4 suppliers and build the relationships and credit necessary. Keep your funnel full but workload manageable.

It’s also important for contractors to know their company’s financials like the back of their hands. They should know how much is coming in, how much is going out, and how much they need to survive.

Having these points nailed down will allow a company to remain flexible. They’ll be able to make better-informed decisions in less time, which could be a key to surviving the next year. 

Automate Processes to Shift Your Focus

Contractors need to keep their eyes and ears open moving forward, else they could miss an opportunity for growth, or stumble upon a significant setback. Rather than spreading that attention with day-to-day office work, contractors should rely on construction management software. 

These programs automate mundane, everyday tasks, allowing the contractor and its office staff to be more creative and think outside the box for solving more complex solutions. Also, these programs lessen human error, giving contractors a better perception of how their company is running.

Prepare for an Endemic

There’s a chance that the pandemic will turn into an endemic, which sounds similar but means something very different. A pandemic means the disease is highly contagious and spreads rapidly. An endemic means that the virus will always be here in some shape or form, such as the flu.  

Changing to an endemic could mean a lot of things. First, it’s highly unlikely that government agencies will force people to stay home. Many folks might head back to cities, dumping their freshly renovated homes back on the market. Materials might even become affordable again.

While it’s hard to say what a categorical change to the virus will do for the construction, it’s likely to breathe some air back into the industry.  

The Next Year Will Be Exciting

The next year will be an exciting one for construction contractors. There still isn’t much certainty, and no one knows for sure when the pandemic will end. But, with the tips above in mind, contractors can fortify their businesses for the upcoming year.

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. 

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