The past 12 months have been unpredictable for contractors (and that’s an understatement). In order to gain insight into some of the issues contractors have encountered, we asked the team at Grassi to share the top five findings from their recent construction industry survey. Briq Vice President of Customer Success, Ellis Talton was joined by GRASSI Construction Practice Leader Carl Oliveri, and GRASSI AEC Practice Leader Robert Brewer to discuss the results. Our noted panel covered topics that included:
There’s a lot of valuable information here, so we’ve summarized the interview with timestamps to help you find what interests you most.
Let’s dig in!
Get to the point with the below timestamps:
“Grassi released a comprehensive survey outlining, very effectively, the state of the industry in construction. And today we're going to talk about the top five takeaways from this report. I read the report recently. I think for anyone in construction, whether you're in the A&E world, the construction world, or even if you're not in the tri-state New York area, which is where Grassi is based, this should be required reading.” -ET
“We got together with our team and we said, ‘let's go on a journey here’. ‘Let's really gauge what the current conditions and the future outlook of the industry are going to be. Let's come up with some kind of benchmarks for a report that's going to aid the industry in recovery and finding opportunities.’ Because in every marketplace there's opportunities. There's challenges, but there's always opportunities.” -CO
2020 impacts to revenue and profit (~11:00)
“I think obviously there were a lot of challenges in 2020. And the first item we wanted to talk about is, how those challenges are impacting revenues and profits. The first finding is related to the number of bidders- and we did see a large increase in the number of bidders- 47% of the respondents said they're competing against five to nine bitters on each project, but 22% say they're competing against 10 to 15 bidders now. This is a big increase from what they had before.
What we're seeing is, even some of the very large companies are bidding smaller projects and therefore adding to the number of bidders- even on those small to midsize projects. We've talked to our clients. Our clients are seeing the same thing as the survey is saying.
And the issue is, when there's less work and people need work and there's more bidders, it really equates to aggressive pricing. That will have a dangerous effect on revenues and profits. The issue here is that I think it's going to continue to increase with the number of bidders. We've been hearing it even since we took the survey, it's even getting worse, I believe. So, this is the first takeaway really that relates to revenues and profits.” -RB
Labor challenges (~23:00)
“Going into a pandemic, we were at all time highs. We had full employment in construction, or close to it. The challenge we were seeing was that as the baby boomers were retiring, there just was not a lot of young talent coming into the industry.
For whatever reason, the appeal is not there, there's a perception issue there, whatever it is. People weren't coming into the industry. Which I think is insane because it's an industry that affords young people the ability to be instant entrepreneurs, the ability to work with cool technologies, the ability to build and really make your mark on an urban area. But we dove into it because we know it's out there. And obviously the seismic change of labor faced during the pandemic were COVID outbreaks and how that impacted job sites almost immediately.” -CO
Job-site technology (~32:00)
“Job site technology was essential in keeping sites open and running jobs during the pandemic. And hopefully, the silver lining would be that technology will continue and technology will advance in the construction industry, and we'll be able to see big changes in the future.
I mean, a few of the things that were highlighted for job sites that were helpful for the contractors were; 45% instituted virtual toolbox talks, so they were able to do that virtually, either on iPads and so on. As for site safety: they have to have their site safety meeting, so they did that with videos and with virtual site safety instead of in person. It really proved to be a tremendous time saver, and very efficient. This is not over the top, but it was something that just wasn't being used, and it was very effective, and I hope that these types of things continue in the future.” -RB
The Covid-19 impact (~38:00)
“We're calling COVID, ‘The known unknown,’ as we've seen with this Delta variant. Like I said, we know viruses mutate; we just don't know what the impacts might be. It's a respiratory infection, it's going to be here, it's going to be with us. So we're going to grapple with it. I'm confident we will get past it, but according to 65% of the respondents, they can't be confident about their projects right now because they don't know what the impact of the Delta is going to be, if it's going to stagger the shift, shut down the job site, or something else.” -CO
“My advice, again, to deal with the COVID-19 impact, that ‘known unknown’ here, is you have to cash flow forecast as much as possible. Plan, predict, whatever that looks like, know what you have out there, feel, get an idea of when it's going to come in. So if you do have to have a shutdown - if the job is shuttered unexpectedly - at least you have an idea of when you're going to need a cash infusion. Knowing the day-of, is too late.” -CO
2021 and beyond! (~43:00)
“We see 22% of contractors believe that there's going to be a full recovery by the end of 2021 into 2022. That's positive. We get excited when we hear things like that. Some of them don't think this will happen until 2022, but it's going to happen, right? We have concepts floating around out there like this infrastructure spending bill, which is a great way to jumpstart the construction industry. It's going to be the, no pun intended, it's going to be the shot in the arm to get us going forward.
Some don't believe that we're going to see recovery until 2023 or later. Personally, talking to people in the industry, talking to the associations and other thought leaders, my personal opinion, is the late first half of 2022, early second half of 2022, is where we start to feel like we were in 2018 going into 2019.” -CO
Thank you! (~54:00)
The Briq team would like to thank our guests Carl Oliveri and Robert Brewer, and everyone who joined us for our live webinar.
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