Embracing Technology to Improve Labor Crunch in the Construction Industry
Walls and ceilings contractors looking to add an extra set of hands this year, such as an additional drywall hanger or finisher, may find themselves either stretched thin or limiting the number of projects they can bid, win, and complete.
With two years of strong demand, the construction industry is experiencing project backlogs exceeding nine months. However, rising wages and higher demand are creating critical chokepoints for many contractors as they struggle to fill essential positions—from the field to the office.
While smaller shops may be able to absorb this industry-wide labor shortage, larger firms with high project volumes may find themselves struggling to do more with less. For both groups, investing in construction technology could be the key to keeping pace with productivity and profitability.
How Did We Get Here?
Today’s skilled labor shortage can trace its roots back a decade ago to when the bubble burst. As a result, the industry lost roughly 900,000 skilled workers or 22 percent of the workforce. Even as the market rebounded, it has been difficult to attract new workers, particularly younger ones, to replace those reaching retirement age. Today, over 40 percent of the construction workforce are baby boomers.
On the plus side, construction jobs rose to 330,000 in 2018, topping 7.3 million for the first time since April 2008, according to the Associated General Contractors of America. Meanwhile, hourly pay jumped 3.9 percent, the fastest rate in nearly a decade and the unemployment rate fell to 3.6 percent.
As a result, nearly 90 percent of contractors reported a shortage of skilled workers and 67 percent have struggled to find supervisory staff, according to an FMI Survey. In fact, the Associated Builders and Contractors predict construction could add another 300,000 to 500,000 jobs. If an infrastructure package of $100 billion over 10 years is approved, this number could go as high as 700,000 jobs.
Wanted: Tech-Savvy Workers
It’s no doubt that investing in technology—from estimating tools to integrated accounting software—can improve speed, accuracy, and efficiency. But whether you are ready to add drones and BIM may be a whole different matter. However, hiring the right, tech-savvy workers is essential to surviving this tight labor market.
One of the main drivers of the current shortage is the high number of baby boomers retiring daily. At this rate, the construction industry could lose between 14 percent and 20 percent of specific employee groups, including executives, senior managers, field managers, and project managers, over the next five years.
On the flip side, this situation could be a golden opportunity for tech-savvy millennials. For many construction firms, incorporating emerging technology is a great way to attract and retain the next generation. The more whiz-bang tech like drones, artificial intelligence, augmented reality/virtual reality, smartphone apps, tablets, and wearables are proving a strong draw for this hiring demographic.
Whether trying to attract millennials (those born between 1981 and 1998) or retain Gen X-ers (born between 1965-1980), more and more companies are finding that construction tech is their secret hiring weapon. If a firm’s veterans are nearing retirement and hesitant about learning new construction tech, hiring tech-savvy younger workers can make for a happy way to balance tech with real-world experience. This allows contractors to transition toward automation and digital tools more logically and effectively.
Taking Small Tech Steps
Experts say automating how construction projects get designed, planned, and built could result in cost savings as high as 20 percent annually. Not only can it tech bolster profitability, but it can also be used to increase efficiencies to offset some of these labor challenges.
For example, many contractors find it is easier to start by adding new technology for digital collaboration. Real-time sharing of everything from digital estimates, to equipment logs and punch lists, can make for greater collaboration. With more streamlined communication, smaller crews can more easily stay on the same page and drive to project completion.
Another example is contractors who give up paper time cards for automated time tracking software and apps. When crews can enter their time from the field, the office, or their home, it’s a lot simpler to review, edit, approve, and upload time cards directly into the accounting software.
In addition, when contractors make their time cards part of their integrated accounting software, they can begin to track productivity and financial data for each project. With an all-in-one package, firms can track job costs, labor, and quantities to specific project activities. With a tight labor market, it is important to have access to data so you can assess your costs to isolate things like materials costs vs. equipment costs.
Want to learn about how powerful end-to-end construction management tools are helping contractors battle the labor shortage? Check out On Center’s free Contractor’s Suite White Paper for step-by-step advice now.