INDUSTRY NEWS
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Where we’re heading REPORT: Supply delays, staffing top industry concerns
By Joey Maxwell
T
he pandemic economy is affecting the construction industry in both positive and negative ways. The 2021 “Sterling Seacrest Pritchard Risk Sentiment Index of the Construction Industry” asked almost 90 construction industry leaders to name the top challenges currently facing their businesses. On the positive side, construction leaders are seeing consistent profit margins and more business in their pipelines— but negatively report material costs and delays, as well as staffing challenges, presenting huge hurdles for the industry. The construction businesses surveyed were mostly mid-sized prime contractors with an annual revenue of more than $10 million. Survey participants were asked to choose three top risk issues for their company. Top concerns included: > Material costs and delays (52.8%) > Staffing (52.8%) > Economic issues (29.2%) > Cash Flow (24.7%)
Survey highlights say…
Businesses surveyed felt they were least prepared to handle the issues of material costs, delays and staffing. The construction industry is feeling the strain of increased costs for materials and delays in shipping. The fluctuation in costs has made it very difficult for companies to predict budgets and bid work. It also has made it difficult to stay on budget as material costs increase to record levels and shipping delays result in work slowdowns. Just over 50% of the companies surveyed have had to change the way they work to complete projects on time. Three-quarters of the companies surveyed reported the increased price of materials negatively has impacted their bottom line with 73% of survey participants experiencing project delays. There is good news on the job front. Seventy percent of those asked are seeing a rebound in available jobs and projects. However, finding qualified employees continues to be an ongoing issue for the industry as the skilled labor force has been decreasing
for years. The survey did find more than half of the companies surveyed (60%) have increased employee compensation in the past year in an effort to recruit and retain skilled workers. In all, the Risk Sentiment Level in 2021 rose slightly from the last survey in 2019 to 4.92 from 4.91. Sterling Seacrest Pritchard launched its Risk Sentiment Index in 2015 to determine how prepared construction companies are to manage their risk. Risk levels
peaked in 2015 with a level of 5.15 (on a scale of 1-10). It dropped in 2016 (4.43) but jumped again in 2017 (4.99). This year’s risk sentiment seems to be in a good place especially after the many unexpected twists and turns of the past 18 months. As lumber prices decline and some materials are returning to normal shipping schedules, we hope the return to normalcy will allow companies to experience record growth and well managed risk. CCR
Joey Maxwell is a partner with Sterling Seacrest Pritchard, experts in insurance and risk management. He can be reached at jmaxwell@sspins.com. www.sterlingseacrest.com.
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COMMERCIAL CONSTRUCTION & RENOVATION — ISSUE 9, 2021
