While the Colorado construction market is expected to slow, many are still anticipating increased demand in the labor markets for various sectors. The Cumming Market Analysis offers important data including where demand will increase. The study forecasts an increase in residential, healthcare and education construction projects. Although good news, it makes solving the puzzle of worker shortages for those markets more important than ever. The workforce shortage in the construction industry is not new as most companies have been dealing with the issue for years. Finding new ways to attract and retain quality workers and get more from existing staff is an important consideration. According to the ACG 2020 Construction Outlook Survey Colorado, labor quality and workforce shortages are top concerns for companies going into 2020. In addition, 61% of responders are increasingly concerned about safety as more inexperienced workers enter job sites. The labor shortage has had a cascading effect impacting safety, project costs, delivery timelines and more. The results of the survey provide important insights on how companies are managing the issue. To help clients, prospects and others, Hanson & Co. CPAs has outlined some of the key findings below.
Colorado Construction Survey Insights
- Top Concerns for 2020 – Identifying primary concerns provides insight into what issues are on the minds of industry executives. According to the survey, 89% are concerned about worker quality, 74% worker shortages, 70% rising direct labor costs, 57% subcontractor quality, 40% inadequate career training, 40% increased project costs, 36% safety, 28% inadequate funding for infrastructure, 17% federal regulations and 15% the impact of immigration policy on the labor supply.
- Hiring Needs – According to the survey, 50% of respondents indicated an anticipated necessary increase of one to ten employees, 17% an increase of eleven to twenty-five employees, 4% more than twenty-five employees and 15% expect no change in 2020.
- Hiring Trends – According to the survey, 88% indicated they are having a hard time filling some or all positions, 4% have had no difficulty filling positions and 8% have no open positions. The availability of skilled positions was also analyzed. 52% believe it will continue to be difficult to hire, 13% it will become harder to hire, 27% no change and 8% believe it will be easier to hire.
- Attracting Workers – Given the difficulty in hiring, it’s important to understand what changes Denver companies are making to compensation and benefits to be more attractive. According to the survey, 67% increased base pay over the prior year, 31% provided bonus and incentive programs, 29% have increased benefit offerings, 17% increased base pay at the same rate as the prior year and 10% have made no changes to salary or benefit offerings.
- Impact on Projects – How the tight labor market is impacting projects is an important matter for executives to consider. According to the survey, 40% indicated that costs have been higher than expected, 52% have used higher prices in contracts and bids, 52% have projects that have taken longer than expected, 42% have put longer completion times into agreements and 19% have experienced no impact on project delivery.
- Training Investments – Many companies have changed their investment in training and development to help workers gain proficiency in multiple areas. According to the survey, 46% have enhanced recruiting programs, 35% have increased funding to training programs, 35% have changed programming for current skilled labor recruits and 19% have not made any changes.
- Integration of Technology – The adoption of technology can help companies perform essential functions more quickly and often automatically, or widen the gap between progressive and outdated organizations. The survey wanted to uncover how technology is being used to find efficiencies. 34% have invested in labor-saving equipment (i.e. 3-d printers and GPS guided equipment), 26% methods to reduce on-site work time (i.e. lean construction, virtual construction, and off-site fabrication), and 23% have added specialists. Alarmingly, 49% of respondents have made no changes.
Worker shortages continue to remain a challenge for Denver construction companies. While each is tackling the issue individually, it’s clear that increased salary and benefits, integration of technology and investment in additional training are important. If you have questions about the survey data or need assistance with a construction audit, tax or planning issue, Hanson & Co can help. For additional information please call us at 303-388-1010 or click here to contact us. We look forward to speaking with you soon.