Without proper planning, construction labor shortages could leave your project short.
You know the old saying that “time is money”, but what happens when money isn’t enough to resolve a resource shortage? The U.S. real estate industry is experiencing a boom. However, there’s a catch. That growth is predicated on access to affordable and skilled labor—and finding qualified workers has proven to be a challenge in many parts of the country.
60% of contractors expressed difficulty finding workers.
That’s the latest statistic from a U.S. Chamber of Commerce Q3 survey of contractors. It holds especially true for red-hot areas like Nashville, Charlotte, Dallas and Houston among others. The unemployment rate is already low, and many laborers who found themselves out of work starting in 2008, transitioned to other fields. CBS News estimates that 1.5 million residential construction laborers located work in alternate industries after the recession. Other hefty factors contributing to the labor shortage include:
- Many seasonal and migrant workers returned to their homelands and are finding it harder to come back to the U.S.;
- Few high schools still teach construction trades or encourage trade schools;
- Skill requires apprenticeship—and apprenticeship takes time and mentoring; and
- Skilled workers are retiring 5 times faster than new ones joining the labor pool.
The result is a high demand for skilled and unskilled labor that significantly affects project timelines, increases costs and budgets, and requires more active management. Unfortunately, there’s no easy or quick fix to the broader economic situation. Contractors are finding that they have to pay more for labor, make do with fewer hands and can’t count on overtime. So what should a developer, owner or investor of real estate do?
Anticipation can save the labor day.
Staying in touch with the local trade market and upcoming project demands are now critical. Understanding the potential shortages you will face prior to developing project budgets and schedules can significantly improve your chances to complete a real estate development or renovation on time and on budget. Fortunately, there are companies that have the knowledge and experience to help real estate owners and investors anticipate and plan for these scenarios.
Get expert advice early and often.
Expert consultants can advise on the labor concerns in various markets, and work with designers and general contractors to research and plan accordingly as well as develop protections against the time and cost risks. At Real Projectives®, we’ve helped many clients throughout the U.S. by qualifying contractors with the best reputations in their market, reviewing proposals for realistic approaches, and advising on how much added time and money to factor in for potential challenges. We make recommendations on structuring budgets with adequate contingency amounts, negotiating contracts that properly allocate the risks where they can best be managed, and monitoring procurement to mitigate the impact of potential labor shortages. We also help identify extra or backup resources by making connections to available labor in other parts of the country. Consultants like us can save companies like yours considerable headaches and costly surprises by planning accordingly against labor shortage pitfalls. Doing more with less is our specialty.
Feel free to share your stories and comments. For more information on how Real Projectives® deals proactively with the myriad risks and challenges of development and construction, please comment below, send us an email or give us an old-fashioned call.