Many things can go wrong on a project, including an accident, injury, or property damage. Hazards on the job could result in worker or third-party injuries. Property damage from man-made disasters, such as a fire or explosion, or a natural disaster, such as a flood, hurricane, tornado, wildfire, or earthquake, can destroy a construction site or render it inaccessible.
Planning for the unexpected ahead of time can help prevent and mitigate risks. An emergency plan, while not foolproof, will go a long way to help guide you and your workers through a crisis and minimize the fallout that typically occurs without a plan in place.
Prior to developing a plan, perform a risk assessment to understand and evaluate the risks your company faces, the processes you already have in place, whether they appropriately address these risks, and where gaps in protocols may exist. In identifying the risks, you can develop new policies and update or revise existing practices to better align with changing or evolving situations and emerging trends.
Once you identify your risks, create an emergency plan that includes:
In addition to communicating your emergency plan to all workers, share it with all stakeholders, including subcontractors to ensure their activities and exposures have been contemplated, suppliers to address risk to their materials, and the project owner or client to account for any site-specific hazards. The plan should be reevaluated and updated on a regular basis to ensure that it continues to address your risks.
Data from the U.S. Bureau of Labor Statistics shows that the price of used cars and trucks jumped up by 40.5% from January 2021 to January 2022. Used pickup truck prices have risen at a faster clip than new trucks, with the average used full-size pickup truck eclipsing $40,000 in 2021.
The reason for the spike in used-truck prices is the result of too few vehicles available for sale during the pandemic and too many buyers. Factory closures followed by supply-chain disruptions caused new vehicle inventories to become tight, which resulted in fewer trade-ins and fewer used vehicles available. Vehicle output shrank by 3.3 million due to plant closures during the pandemic, according to an article in the Chicago Tribune.
Rental car companies and other fleet buyers have added to the vehicle shortage. They are typically a major source of used cars and trucks for dealers and have been selling fewer vehicles. Fleet buyers are simply not buying as many new vehicles (due to their high cost and delayed availability) so they aren’t offloading their used trucks.
Add to this the high cost of diesel which is needed to power trucks and machines that are widely used in construction projects and materials, and you have a confluence of factors impacting the spend on a project. Rising gas prices affect energy-intensive heavy construction products such as bricks, cement, copper, and aluminum where energy accounts for about one-third of costs.
The cost of construction had already begun to rise in 2021. It is, in fact, the highest it’s been in 50 years with contractors and home builders feeling the effects. According to recent Census Bureau data, construction costs increased by 17.5% over the year from 2020 to 2021. This reflects the largest spike from one year to the next since 1970. Furthermore, the costs in 2021 were more than 23% higher than in pre-pandemic 2019.
Even if contractors are able to find used trucks to replace their old vehicles, they are paying a higher price for the vehicles along with the fuel needed to go to and from a job. These and other surges in prices should be factored into the cost of a job moving forward.
Sources: Chicago Times, Financial Times
You work hard on the job, only to risk not being compensated. Your job as a contractor is already fraught with risk from various avenues – the last thing you deserve is to be at risk of not being paid in full and on time. Payment delays, however, are common in the industry, causing cashflow issues and the inability to pay others, such as subcontractors, in addition to your own bills.
Here are several strategies you can use to reduce the risk of late or no payments, as well as ways to deal with them when they do occur.
A solid contract will help ensure that projects go smoothly and you and your subcontractors are paid fair and square for your hard work.
Sources: CCIS Bonds, Nolo, AIA
Unlike large corporations, most small construction firms and contractors don’t have a dedicated marketing department (or marketing employee, for that matter) with a big budget to bring in new business. This shouldn’t stop you, however. There are cost-effective, proven marketing strategies you can implement and execute that will help you target the right type of customer for your business to generate additional revenue in 2022 and beyond. With a well-though-out plan in place, you won’t be wasting dedicated dollars on leads that go nowhere and will get the ROI you need to help expand and grow your business.
Define who your customer is. Are you targeting residential and/or commercial clients for construction work? Is the work revenue-specific, for example, construction for high-end homes? If you are a roofing contractor, do you service both homes and offices? Is all your work local and within certain ZIP codes, or are you traveling throughout the region for jobs?
Having a clear definition of your customers will help shape your messaging so you can speak directly to their needs, including their pain points and concerns and how your services address them. This will also help you determine the type of lists to buy so you accurately zero in on the right target audience and don’t spend money trying to reach people whose service needs are not in your wheelhouse.
Other than asking for referrals from friends and family, everyone searches online to find a contractor. You need a plumbing contractor, you Google plumbers in your area. You need to replace a roof, you search online. Even potential clients who have a list of GCs to contact for a job, go online to research firms for a more detailed idea of each company’s experience, expertise, licensing, bonding, certification, insurance, Better Business Bureau (BBB) rating, etc. Here are some suggestions to get your firm’s digital presence up to par:
Review your website.
You most likely don’t have the time or bandwidth to update and improve your website. You can hire a freelancer or firm to perform a website analysis and then make the necessary changes and updates. There are individuals and businesses that offer website design and development services in price ranges that will fit your budget.
Get a social media presence.
If you don’t already have a social media presence, at the very least set up Facebook and LinkedIn platforms. LinkedIn is great for B2B, and each quarter sees significant increases in monthly active users and platform engagement. The platform is also constantly introducing new features that improve the performance of businesses and pages.
If there is someone inhouse who can post for you, set up an Instagram account to feature photos of recent jobs. You want people to see your work. Plus, the wider your digital reach, the more likely people will find you when they search for the services you provide. It doesn’t cost anything to have a social media presence (unless you hire someone to write your posts).
Be sure the branding on all your social media platforms is cohesive and consistent. Post regularly on your platforms.
Conduct a Lead/Nurture Email Campaign
Complement your online presence with an email campaign to the target audience that represents your customer demographics. This involves purchasing the right list and personalizing emails with copy and images that speak to your potential clients’ needs. A lead/nurture campaign will help bring leads into the sales pipeline, establish company recognition, and foster trust with potential customers.
Here are some best practices to follow when conducting a campaign:
Email marketing firms are available to help you set up and execute an email campaign as well as track results. It’s important to remember that email campaigns garner results over a period of time. It’s all about nurturing and establishing a business relationship, which is a long-term investment that will ultimately pay off.
There are additional marketing strategies you can consider such as paid advertising, direct mail, telemarketing, print advertising, SEO marketing, and others. Begin with the basics and as your business grows you can look to spend more marketing dollars.
March was Ladder Safety Month with the American Ladder Institute raising awareness on the importance of safety to prevent ladder-related accidents and fatalities at home and on the job. Let’s review some of the ladder and scaffolding safety basics for construction workers.
An estimated 65% of the construction industry works on scaffolding or ladders on a daily basis. Falls from this equipment account for about 15% of all construction accident fatalities each year, as well as at least 20,000 injuries in the industry as a whole. According to the Centers for Disease Control and Prevention (CDC), more than 80% of fall injuries by construction workers that result in a visit to the emergency room involved a ladder.
Accidents involving ladders and scaffolding frequently result in severe or permanent injuries such as broken bones and fractures, back and neck injuries, traumatic brain injuries, and paralysis. Some of the most common reasons for ladder- and scaffolding-related injuries, according to the Occupational Health and Safety Administration (OSHA), are as follows:
Following are safety tips to reinforce with your crew:
Safety on the job is always paramount and it’s important to keep construction workers safe when using ladders and scaffolding.
In recent years, construction project management has changed in favor of a streamlined process that minimizes friction, centralizes responsibility, and increases focus on quality and completion. The shift may benefit everyone involved.
Traditionally, construction projects have involved project owners’ hiring the architect/designer and contractor separately. Under this approach, the project owner requests a bid for the design of the project from an architectural firm. Once a firm is decided upon, the project owner draws up a contract up with the design firm. The project owner and design team then solicit bids from construction contractors for the build, with a separate contract drawn up with the construction firm that won the project.
Essentially, under the traditional approach, there are two different contracts (or more if there are multiple designers involved, such as landscape architects, interior designers, etc.) drawn up between the designer and contractor for the project. Too often this approach tends to establish an adversarial relationship between the two parties regarding responsibility for issues such as scheduling delays, change orders and cost overruns. When this occurs, the project owner is caught in the crossfire between the designer and the contractor.
Over the years, increasingly more project owners and contractors have begun using a design-build approach to help streamline deliverables and address potential issues that arise when everyone is not on the same page and working together as a team. With the design-build project delivery, the project owner contracts the job with one entity that is responsible for managing the project in its entirety. This is led by the construction contractor, typically the general contractor or design-builder, who collaborates with the design and construction teams.
Because the design-builder assumes total project responsibility – from design to costs to scheduling – this approach saves the owner time and reduces designer/contractor conflicts, as they are one, cohesive team. Furthermore, the design-build approach fosters collaboration and offers greater cost certainty, a shorter project timeline, custom
Construction contracts are one of the most critical aspects of a project. They define the parties involved, the work to be performed, how the work will be done and when it will be done, what materials will be used, and how much the project will cost, among many other things.
Following is a list of what is included in a typical construction contract along with some tips to ensure there are no surprises that could negatively impact your business.
All contracts should be reviewed by an attorney and an insurance professional to ensure the appropriate insurance program is in place and, when possible, transfers your liability to a third party. It’s important to make sure you are well protected if there are claims made against you. Review both your own policies and those on which you be named as an “additional insured,” including your subcontractors’ policies.
Despite grappling with the ongoing effects of the coronavirus pandemic, 2021 was a strong year for the construction industry. Total construction spending reached a record high in July of 2021 and, since Q3 of 2020, the industry has added over $20 billion to the economy each quarter. While the road ahead is by no means smooth, 2022 is expected to be another successful year for construction. As the year comes to a close, here are trends and themes to look for in the coming year.
Median home prices reached $363,000 in June of 2021, a 23.4% year-over-year increase. The rising prices speak not only to an increasing demand, but also a shrinking supply. Record low mortgage rates have Americans buying homes at a rate last seen in the 1970s, and the housing supply is unable to keep up.
The National Association of Realtors reports that over the past twenty years, the U.S. has built at least 5.5 million too few homes to keep up with housing needs. And, in response to this low inventory, residential construction is seeing an increase in inventory demand. U.S. home building surged to an eight-month high in November, and housing starts are likely to stay strong in the year to come. Further, for those who have managed to purchase a home and existing homeowners, demand for remodels is expected to remain high in 2022.
Associated General Contractors of America CEO Stephen Sandherr described the recently passed Infrastructure Investment and Jobs Act (IIJA) as a monumental piece of legislation that will “provide a needed boost to the construction industry,” in a statement. With $110 billion devoted to roads and bridges; $66 billion to passenger and freight rail; $55 billion to water infrastructure; $73 billion to electrical grid improvements; and billions more, the bill bodes well for the nonresidential construction sector.
Associated Builders and Contractors President and CEO Michael Bellaman echoed a similar sentiment: “Passage of the bipartisan infrastructure bill creates an opportunity to effectively modernize our nation’s most critical infrastructure, and ABC and our members stand ready to do the important work to bring America’s infrastructure into the 21st century”
According to an August survey from the Associated General Contractors of America (AGCA), six in ten firms report project delays due to workforce shortages. The Home Builders Institute estimates that the industry needs over 61,000 new hires each month to keep up with demand.
On the severity of the labor shortage, Home Builders Institute CEO Ed Brady says, “the construction worker shortage has reached crisis level. The situation will only become challenged in the coming year with other industries rebound and offer competitive wages and benefits to prospective employees.” In other words, the labor shortage is something firms will be dealing with for years to come.
The coronavirus pandemic upended global supply chains and now, nearly two years later, pandemic-induced supply problems persist. Shortages of crucial materials, such as lumber, paint, and steel, persist, leading to increased material costs and project delays. Construction businesses need to get creative and be proactive in sourcing materials to help projects run smoothly and keep costs down.
While the supply chain will remain volatile, we might see small improvements in the domestic supply chain in 2022. Nucor and US Steel both announced plans to build new multi-billion-dollar plants next year.
Though it is not all rosy skies ahead, the construction industry is well poised for growth in 2022. Over the past year and a half, firms have held strong and adapted to meet the challenging market conditions. Firms who stay resilient and find creative solutions to industry wide problems will come out on top in the coming year.
Purchasing insurance can be a headache, and, with clients to please and employees to manage, the last thing you have time for is sifting through policy paperwork. Operating without insurance is costly, but so is operating while underinsured. It’s about finding the sweet spot, having enough coverage but not so much that you are paying more than you should. For some insurance, project specific insurance is the optimal coverage.
Essentially pay-as-you-go insurance, project specific plans provide coverage specific to your individual project. Unlike an annual policy, you pay for insurance only at the time you are working, either on a per contract or per day basis. If you are just starting out with contracting, or you operate on a small scale, with projects coming in inconsistently, this type of policy ensures you are not overpaying for insurance.
Further personalizing this coverage is the fact that you only pay for the coverage needed for that specific project. It’s not only a matter of time, but also the unique risks of the project at hand. Underwriters consider the specifics of the jobs including services being provided, location, cost, business history. Using statistics, underwriters tailor premiums to the specific project. Projects in densely populated areas have greater potential risk of injury; history speaks to your business experience; cost of project explains what’s at stake; a new addition to a home is inherently riskier than a bathroom modification — brokers gather this information and underwriters use it to help calculate premiums. Project specific insurance premiums account for the specific risks of the project.
The key takeaway here is that project specific insurance is customized to the specific project, as the name elegantly implies. It can offer contractors adequate protection at a more affordable rate depending on the nature of their business and volume of transactions.
Even those with large annual policies can still benefit from project specific insurance in addition to their current coverage. You might be working on a project that has certain risks your basic plan does not account for; you might be working on a risky project that could potentially exhaust the limits of your regular plan; or you may be required by clients to have higher limits than your current policy allows. Typically, project specific insurance becomes the primary insurance on the covered project and annual practice policies include exclusions for work performed on projects covered by project-specific insurance. There are instances, however, where practice policies can sit in excess of a project-specific policy and act as an umbrella kind of coverage.
Ultimately, insurance is complicated and, in the risky business of contracting, there is no use in taking unnecessary chances — insurance is paramount. Speak to an agent to find your Goldilocks policy, coverage that is “just right” for you and your business’s needs.
With constant technological advancements and ever-changing tastes, the construction industry is always evolving. Staying on top of trends helps you interact more meaningfully with clients — it shows them your passion for and knowledge of your industry. As we usher in the new year, take a look at some of the top trends in building and design.
Colorful Kitchens: While the sleek and modern black and white kitchens are not going anywhere just yet, a new, eclectic and colorful style is entertaining the design stage. Watch out for rich jewel toned cabinets, funky wallpapers, mixed metals, and alternative countertop material this year.
Sustainability: Homeowners are not only looking for homes able to withstand extreme weather, but also homes that are eco-friendly and efficient. Smart technology, alternative energy, recycled materials, and deliberate climate friendly landscaping are all expected to rise in popularity.
Prefab Construction: Prefab construction has been used in the industry for many years and, in light of the labor and supply shortage, they may be making a comeback through modular construction. Modular construction is an increasingly popular construction technique where things are brought to site in nearly finished building blocks which are then quickly assembled. Experts predict modular construction will increase 6% globally in the year 2022.
Indoor-Outdoor Living: All the time spent at home during quarantine has many homeowners yearning to turn their home into their own natural oasis. Outdoor fire pits, outdoor televisions and speakers, and direct access to outdoor spaces via porches and patios are popular among buyers.
Patterned Hardwood: From herringbone to chevron, two-toned to concentric rectangles, patterned hardwood floors are growing in popularity as homeowners move away from carpet. Hardwood and wood-appearing flooring, like laminate or vinyl, are a trend that is only increasing.
Larger, More Luxurious Bathrooms: The average bathroom is often boring and outdated. Now, after too much time spent at home, many are looking to revamp their washrooms. Bathrooms were the second most popular home improvement project of 2021 after yard/landscaping projects. Realtors are seeing an increase in bathroom size and noting that clients choose showers over tubs.
Flexible Rooms: Single use spaces are a thing of the past. Offices that double as guest rooms, dining rooms that double as offices, flexible spaces and multifunctional furniture are of great interest to homeowners.
Minimalism and Maximalism?: Over the past two years, the minimalists and maximalists have veered further and further away from each other. The maximalists have become even more over the top amid COVID, using their increased expendable income on their homes, and the minimalists have doubled down on their decluttering lifestyle. It varies by client, but the key takeaway is people’s tastes are becoming more extreme versions of what they were.
Kitchen are the Heart of the Home: The kitchen has grown into the center of the home. Not only is it where food is prepared, it is also where people gather and entertain. On the double island design trend, designer Marshall Erb says “there’s a dinner-theater component to double islands.”
Lifestyle and culture ultimately dictate design trends, and technological advancements determine operational trends — both of which are always in flux. Engage with your industry online and in real life by joining LinkedIn groups, social media sites, and trade associations to stay abreast of the latest trends.