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Construction Challenges to be Aware of in 2021

24 Dec 2020, Posted by F.A. in News
Construction Challenges to be Aware of in 2021

As the COVID-19 pandemic continues to impact the globe, many industries have been impacted in ways that will continue into 2021. The construction industry is no exception, as contractors have had to reckon with project shutdowns, layoffs, and the increased cost of construction. As 2021 nears, industry experts are anticipating many of these issues continuing and have identified some areas to keep an eye on. Whether you are concerned about your ability to work, access to concrete form rentals, or new revenue, below are some considerations for the new year.

Labor Shortages

Even before COVID-19 began to spread, the industry was facing a historic lack of skilled labor, and this problem has not improved, even with projects being shut down and delivery of concrete wall form products being delayed. Workers who were laid off earlier in the year have been able to return to work, but some are not willing to do so due to concerns about the virus or needing to tend to family responsibilities brought on by virtual schooling or illness.

It’s also predicted that once recovery begins, these shortages will continue because of a lack of worker migration. With fewer people moving to expensive markets like California or New York, where large and costly projects are more common, the labor shortage could be aggravated by these patterns.

Shrinking Backlog

Associated Builders and Contractors offers a Construction Backlog Index to estimate the amount of upcoming work- in September 2020, it was 7.5 months as opposed to 8.0 in August. This is 1.5 months less than the same months last year. Additionally, the Construction Confidence Index produced by the same organization show decreased readings for sales and profit margins. This leaves future months looking grim for contractors hoping to add to their backlog in the coming months, with the declines appearing to accelerate across markets.

Falling Construction Costs

For the first time in a decade, construction costs have begun to decline as a result of pandemic-related forces, meaning contractors may feel a loss in profits. The Turner Building Cost Index is used to measure costs in the non-residential building construction market and has shown a 1.5% decrease since the beginning of 2020, marking the first time it has declined since 2010. With prices down, competition has increased as contractors work to secure as much backlog as possible.

Less Work

After the economy begins to recover from the effects of COVID-19, economists president that commercial construction will remain in decline due to a number of factors. With a lot of work going fully remote, the demand for new office buildings is expected to decrease. The healthcare sector has also shifted away from hospital use for non-essential procedures, and large venues for sports or performances are not likely to be used for some time after recovery begins. With these large projects in less demand, there will also be less of a demand for services like concrete form rentals, workers, and construction management professionals.

Increased Prices

Since May, most common construction materials have seen price increases, including high lumber prices. Among 11 subcategories of construction material, 8 were found to have experienced monthly increases, and future demand could cause these prices to rise even higher. Some people are buying in bulk or expanding supplier networks to protect against these swings.

Supply Chain Breakdowns

While production is returning to previous levels, the strain placed on supply chains and delivery processes remains a concern. Rather than relying on a single material supplier, people are needing to diversify and have multiple chains available to them in case of an issue. With a reduction in shipping, this can help protect against issues moving materials across state lines.

Lower Government Revenues

State agencies are often responsible for funding infrastructure initiatives like roads, bridges, and transit projects, but they are experiencing sharp declines in revenue from sources like the gas tax. Instead, states and local governments are turning to the federal government for aid. This lack of funds is one of the top concerns of contractors right now, as the revenue allows them to begin projects, pay workers, and pay for material as needed.

Forming America

With a wide range of concrete formwork, shoring equipment, and accessories available for rental, Forming America is here for construction workers during this difficult time. Concrete forms rental can be a helpful way to complete projects without purchasing the equipment, and a reliable supplier is crucial now. Contact us today to discuss options for your next project. n