Archive for category: Frontpage Article

Associated Builders and Contractors Institute Apprenticeship College (ABCI), the education and training arm of Associated Builders and Contractors Florida East Coast Chapter, is pleased to announce that Ladd Henley has joined as Occupational Safety and Health Director.

In this role, Henley will be responsible for safety-related membership services such as various forms of safety training, third-party jobsite inspection and safety program development and review. In addition, he will lead activities to enhance and grow the Institute’s safety presence in preapprenticeship, construction education and apprenticeship programs offered in Florida.

“Ladd has a proven track record in construction safety and will be an asset as we look to round out our construction safety curriculum,” said Nathan Ferree, Chief Operating Officer of ABCI.

Henley has nearly 30 years of construction experience with 18 being dedicated exclusively to construction safety. His overall commitment is to developing relationships, assisting construction companies with safety hazard mitigation and helping to protect the workforce from accidents along with assistance protecting employers from costly delays due to incidents or accidents. He speaks fluent Spanish.

Prior to joining ABCI, Henley served as a Regional Safety Manager for Kast Construction as well as Corporate Safety Director for Burke Construction Group, Inc.

Associated Builders and Contractors Institute is a 501(c)3 organization dedicated to providing diverse, affordable and high-quality classes, apprenticeships and other construction industry-related programs throughout South Florida and the Space Coast. Since 1950, ABC has been working to attract and retain a quality construction workforce and invests more than $2.6 million locally each year to construction education and training.

The construction industry is experiencing an ongoing hiring drought, and the challenge of hiring has led to a loss of business for many general contractors. A recent report from the U.S. Chamber of Commerce Commercial Construction Index indicated that 92 percent of contractors reported difficulty finding construction workers. Of those, 42 percent said that this has caused them to turn down work.

According to the Associated Builders and Contractors, the second half of 2022 will expand the construction hiring issue due to inflation, federal spending, an aging workforce, and persistent shortages. As we combat these obstacles, it becomes necessary to prioritize recruitment, retention, employee training, and workplace safety. Investing in technology solutions is key to the construction industry’s success.

Technology Positively Impacts Worker Retention

Construction is known to be a physical profession, which creates real workforce problems as individuals age out of the work. According to the Bureau of Labor Statistics, the average age of a construction worker is about 42 years old, and 36 percent are between the ages of 45 and 64. Advanced technology solutions help to elongate the careers of construction workers and retain this crucial segment of aging talent.

The stress of making decisions on the fly that impact quality, schedule, and cost is alleviated when technology provides certainty via real-time data. For example, before pouring the concrete, digitally verifying installation progress, quality, and dimensional layouts would enable the identification of errors and omissions in the slab relative to the plans and shop drawings. Subcontractors can then use that data to make relevant corrections before concrete is poured and utilize it as a source of truth for the future. This precision eliminates decisions based on second-guessing inherent in today’s manual quality control processes, leading to increased productivity and schedule acceleration.

Technology that increases construction accuracy and reduces mistakes will unlock the potential for a higher degree of communication, certainty, schedule, and cost. Accurate, real-time data equips teams to identify errors, gain heightened accountability, and collaborate better because the insights show where attention is needed now, rather than having to tell a team member that mistakes were made after the fact. This eliminates finger-pointing when an error is identified and creates a more positive environment that boosts morale and employee retention.

The Key to Unlocking the Future Workforce’s Potential

The early adoption of technology, such as plan verification software that provides real-time actionable insights on a project, will improve the construction work environment and potentially attract more professionals in the near future. A new superintendent typically needs up to six years of field management work to become fully trained in how to forecast errors. With technology-enabled data, contractors can cut that process down to as little as two years. The checks and balances provided by data-informed reports identify a variety of issues and alert field mistakes as they happen, equipping the superintendent to know what to look for and getting them up to speed in the field quicker.

Trade schools were once seen as a “fallback” option in the 1980s and ‘90s but are now more attractive for those who graduated high school mid-pandemic. According to ECMC Group, a teen’s likelihood of pursuing a four-year degree decreased 23 percentage points between May 2020 and September 2021, down to 48 percent from 71 percent. Given the tools to succeed, construction can become a more attractive job option for recent graduates.

When we equip trades with cutting-edge tools, the construction industry becomes a more attractive career path, especially for younger individuals who have an easier time adopting new technology. While we train the future workforce to use data effectively on the jobsite, we’re teaching them how to adapt to new technologies and better prepare them for their future.

Accurate data-based technology allows management to accelerate lessons learned for employees before it’s too late, showing them solutions rather than just problems. If a worker is repeatedly improperly spacing panels or installing crooked components, real-time documentation allows the project manager to identify where retraining is needed. Documenting errors along the way equips the team to improve work processes and instruct workers on how to succeed moving forward when reporting mistakes.

Leveraging Technology to Improve Worker Safety

Over 40 percent of American workers report experiencing increased mental distress due to the pandemic, and over 85 percent say that work impacts their mental health, according to the National Safety Council. Prolonged workplace distress causes fatigue and impacts worker safety. The risk this presents extends to construction trades. According to the U.S. Occupational Health and Safety Administration (OSHA), decreased alertness from worker fatigue has factored into industrial disasters, prime examples being the 2005 Texas City BP oil refinery explosion, the 2009 Colgan Air Crash, the explosion of the space shuttle Challenger, and the nuclear accidents at Chernobyl and Three Mile Island.

The most significant contributor to construction workplace safety incidents is unplanned work, with an estimated 70 percent of safety incidents happening during rework. When workers aren’t in a planned workflow, like during the rework process, they are contending with heightened risk and stress. The uncertainty leaves them more vulnerable to making mistakes that can cause financial losses within the project or, even worse: increase the likelihood of injury. With the proper tools and actionable data insights that catch problems before they happen, general contractors avoid rework and improve the well-being of trades.

Technology Improves Productivity and Accuracy

Contractors orchestrate a project according to a schedule, and when a schedule slides, it affects costs and penalties and limits their teams from moving on to the next project. By leveraging technology and data, industry professionals will streamline the construction process by speeding up tasks, ensuring better quality, and protecting budgets.

For example, façade installation is complicated to inspect and ensure quality control. Any unseeded gasket and missing coupling bar will cause structural issues and warranty concerns if unattended. Digital verification platforms enable confirmation of every square inch of the exterior without superintendents having to do it from the ground level and balconies manually. By shifting the weight of this obstacle to data-informed technology, general contractors can reduce risk and eliminate errors, saving time and resources through greater efficiency. This process allows general contractors to more precisely understand how to budget for contingency time, which should be reserved for unavoidable circumstances like weather delays. Through this heightened efficiency, industry leaders maximize the productive time of workers, freeing them from endless hours of manually checking every detail and allowing them to focus on more significant parts of the work.

Data-driven processes better equip construction decision-makers to combat the prevalent labor shortage through tools that improve worker retention, training, and worksite safety. Whether improving workplace morale by providing certainty and eliminating errors or streamlining the construction process by freeing up the team to complete more meaningful tasks, technology is the key to bridging the construction trade and talent gap and accelerating the industry forward.

Spending on nonresidential buildings picked up momentum toward the end of 2022, with gains approaching 10% on an annual basis. Much of the increase was the result of materials and labor costs, but still, the results were encouraging given macroeconomic headwinds such as inflation, rising interest rates, and weak consumer sentiment scores.

This year is expected to produce further growth in construction spending, but at a more moderate pace. Overall gains in spending are projected at just under 6%, with almost 3% for the commercial sector, 15% for industrial facilities, and 4% for institutional buildings. Next year, growth in spending is forecast to slow to under 1%, with a decline of 1.4% for commercial, a modest 0.4% increase for industrial, and a 3.8% increase for institutional facilities.

An unbalanced year for construction in 2022

While the spending gains this past year were impressive, they also were uneven by sector. The commercial/industrial sector increased by over 15%, as did retail and other facilities (which includes distribution), spurred on by strong gains in manufacturing, Manufacturing gains have resulted in large part due to reshoring efforts by U.S. companies. The Reshoring Institute estimates that reshoring and other foreign direct investment in the U.S. produced 350,000 manufacturing positions in 2022, almost three times the average of the prior decade.

The distribution component of the retail category has seen the strongest growth of any major building sector over the past decade. Due to explosive growth in e-commerce, the construction of distribution facilities has increased by nine-fold over this period, compared to just over 50% in overall gains in spending on buildings.

The other two major commercial building categories – offices and lodging – essentially saw no gains last year as both sectors were still adjusting to the reduction in demand during the pandemic. The institutional categories saw only very modest spending growth last year, with healthcare and amusement/recreation being the only major sectors with increases of 5% or more.

Even though the pace of growth is slowing, there continues to be dramatic increases in input costs for construction projects. The most recent figures from the US Department of Labor estimate that input costs increased almost 10% over the past year. While very high by historical standards, this growth rate is only about half of its growth pace in late 2021.

It is difficult to separate real gains in construction activity from mere inflation in labor and material prices. However, one method for disentangling the two is to look at construction employment levels, since increases in employment would strongly suggest an increase in output. Over the past year, nonresidential construction employment increased almost 4%, suggesting that a significant share of the increased spending resulted in increased construction output.

The slowdown unfolds…

Entering 2023, the construction industry will be confronted with mounting challenges. In addition to high levels of inflation, rising interest rates, and continued supply change issues, many economic forecasters expect a recession this year, likely in the first half. While that will certainly impact the construction outlook, it will do so with a considerable lag. Most projects already underway as the slowdown hits are likely to continue to completion, and the Associated Builders and Contractors reported that backlogs at contractors were averaging nine months in late 2022.

Still, signs of a construction slowdown are emerging. The American Institute of Architects’ Architecture Billings Index fell below the significant 50 threshold in the fourth quarter of last year, indicating a decline in billings nationally. Research conducted by the AIA determined that the lead time between design activity and construction activity runs in the 9–12-month range, suggesting a slowdown in construction spending some time around the third or fourth quarter next year.

Like construction companies, architecture firms are sitting on elevated backlogs of around seven months. However, unlike construction companies, architecture firms have seen that backlogs can evaporate when business conditions weaken as clients may decide to delay or even cancel projects if they no longer make economic sense.

Despite strong revenue growth last year, architecture firms have modest expectations as to how much revenue will increase this coming year. After reporting average revenue growth of almost 7% last year, projections for this year were lowered to below 1%, with 30% of firms expecting a revenue decline of 5% or more. Multifamily residential firms are expecting the steepest revenue declines, while institutional firms are anticipating growth about twice the overall average for the profession.

The members of the AIA Consensus Construction Forecast panel have a similar outlook in terms of the performance of key sectors this year. While overall growth is expected to be almost 6%, the commercial sector is expected to see the weakest gains at 2.6%. Spending on institutional structures is projected to increase over 4%, and a whopping 15% for industrial facilities.

… as the market softens in 2024

The construction slowdown that is expected to begin in the latter half of this year is projected to continue into 2024. With overall growth of less than 1% next year, spending on commercial facilities is projected to decline by over 1%, and industrial construction should eke out a very modest gain of less than one-half of 1%.

However, the institutional sector is projected to keep the overall nonresidential building market in the growth category. The 4% expected growth for 2023 is projected to fall only modestly to just below 4% for 2024. The two key pillars of the institutional market – health care and education – are both projected to have relatively healthy years with growth in health care spending slowing modestly to 3.2%, and education accelerating to 4.6%.

Reconstruction work on the rise

Over the past few decades, there has been a steady increase in the share of revenue at architecture firms coming from reconstruction projects – renovations, retrofits, building additions, and historic preservation. Part of this derives from an expanding interest in sustainability – fixing up an older building is more environmentally sensitive than tearing that building down and constructing a new one. However, fundamental economics and demographics likely play an equal or greater role. Slower population growth in recent years and the resulting slower growth in the economy means that we don’t need to expand our building stock at the pace we did a decade or two ago.

We’re seeing this increased growth in the reconstruction share across all major building categories. Architecture firms reported that in 2021, 62% of their revenue from commercial and industrial facilities came from reconstruction projects, up from 38% 15 years ago. Institutional work has seen a similar trend, with revenue from reconstruction projects rising to 61% from 38% 15 years ago. The residential sector is starting from a lower base, with remodeling work accounting for 40% of billings in 2021 from a level of 26% 15 years ago. This does not imply that that homes are not remodeled as much as buildings, but rather that much of the redesign work in this sector doesn’t occur at architecture firms.

It’s likely that the pandemic has provided a boost to reconstruction activity. Many building uses have changed  substantially with the pandemic as consumer spending behavior has evolved. An AIA survey last spring found that adaptive reuse and conversion was the single most important goal of reconstruction projects at that time, accounting for over a quarter of all reconstruction work. Basic interior modernization and tenant fit outs were the next most popular goals, accounting for just under 25% and just under 18% respectively. If a soft economy, high inflation, and high interest rates make more construction projects less feasible in the coming quarters, we can expect continued growth in the share of work coming from reconstruction projects, and a buffer against a more serious setback for the profession.