Growth Projected for Colorado Construction Companies
Many Denver area construction companies struggled to keep up with demand in 2018 given the challenges of a shrinking labor market. As the first quarter ends, it’s clear this challenge has not diminished the ambitions of management to take advantage of growth opportunities. According to the 2019 Sage Construction Hiring and Business Outlook Survey, 77% of national survey participants are expected to increase their headcount, while 84% of Colorado companies are planning to do the same. The continued growth is certainly welcome news for industry companies but comes with the continued challenge of finding labor to complete the work. In fact, 78% of national survey participants are having difficulty filling positions, while 55% of Colorado companies are experiencing the same challenge. This unique situation has forced many Denver companies to search for new ways to maximize productivity. The survey’s findings provide useful insight into the state of the Colorado construction industry as well as steps being taken to accommodate the challenge.
About the Survey
The Colorado survey findings are based on results from 74 companies including general contractors, specialty and sub-contractors, architects, engineers and designers as well as material suppliers. The survey consisted of 20 questions pertaining to growth opportunities, hiring and recruiting practices, business planning and more.
Key Survey Findings
Dollar Volume of Projects – The surveyors wanted to get insights from Colorado companies on the expected dollar volume of projects in 2019. It specifically asked about various project categories ranging from highway, public buildings and hospitals to water/sewer and residential construction. Results show there is an expected 27% increase in K-12 school construction, 26% increase in water/sewer construction, 24% increase in public building and 11% increase in transportation construction. Conversely, there is expected to be a 7% reduction in multi-family construction and a 3% reduction in highway and manufacturing construction.
Headcount Changes – Since it appears the dollar volume of certain project types will increase, it’s important to understand how companies will adjust their labor levels to accommodate the demand. According to the survey, 82% of respondents expect to increase their overall headcount, 13% expect no change and 4% anticipate reducing overall staff levels.
Ability to Fill Positions – The ability to find qualified labor has been a challenge that Colorado construction companies continue to face. To understand if and how the problem will continue, the survey was asked about the ability to fill positions. According to the survey, 45% of respondents believe it will continue to be hard to find staff, 24% believe it will become harder, 20% expect no change and 9% believe it will become easier to hire.
Impact of Tight Labor – The tight labor market may have an impact on existing and upcoming projects. According to the survey, 32% of respondents indicated costs have been higher than initially projected, 47% indicated that projects have taken longer than anticipated, 38% have included higher pricing in proposals and 28% have extended project timelines to accommodate.
Training Investment – In seeking to get more productivity from employees, companies need to offer additional training. According to the survey, 71% of respondents plan to increase investments in training and development while 27% indicated they will stay the same. No respondents plan to decrease spending on training and development.
Biggest Concerns – While labor appears to be the most pressing concern, the survey wanted to find out what other issues are on the minds of management. According to the survey, 29% indicated worker shortage, 15% are worried about worker quality, 10% are concerned regarding increased competition for work projects, 6% are concerned about safety concerns and 5% indicated rising labor costs as chief concerns.
The construction industry in Denver is continuing to face growth in key sectors across the Front Range but executives are concerned about the constricting labor pool. If you have questions about the survey findings, or need assistance with a tax, accounting, audit or consulting issue, Hanson & Co. can help. For additional information please contact us at 303-388-1010 or click here contact us. We look forward to speaking with you soon.