The construction industry continues to develop with the times. There is always a structure that needs building which is how the industry thrives. Businesses that offer construction hoists and equipment rentals, manpower, and materials will always be in demand for as long as there are developers with projects on hand.
Staying relevant nowadays can be challenging, but delivering high-quality output is a good start so that clients will continue to come their way. However, producing high-quality results is easier said than done.
The Cost of Quality Materials and Equipment
Businesses need to invest money to make more money. For instance, some of the necessary investments come in the form of materials, labor, and equipment.
Needless to say, you need quality materials, professional employees, and efficient pieces of equipment to produce top-notch results. However, profit margins are tightened due to the increasing costs of each one of these important construction elements.
The Cause of the Cost Increase
Here are the major causes of the major increase in costs for material, manpower, and construction equipment.
Construction Materials: Tariffs, Trades, and Environmental Regulations
Many factors affect the cost increase of construction materials. One of the major causes is issues with tariffs and trade. Another reason for the increasing costs of materials is the changes in environmental regulations and, of course, the demand in the market.
Lumber, steel, fuel, and iron are some of the most common materials that a construction project needs– all of which have seen drastic increases recently.
Construction hoists and other equipment on-site need fuel to function, and the project needs lumber, steel, and iron to be able to build.
The cost of crude petroleum went up 49%, lumber 29%, and iron and steel 14% in just one year.
Of course, the increase in costs of these common materials will result in an increase in the cost of projects as well. In fact, the total cost of projects rose over five percent in 2018 alone.
Prices of materials change so rapidly that despite the efforts of some construction firms to negotiate the costs of materials during the pre-development stage– the estimates may be entirely off once the project starts.
Construction Manpower: Labor Shortage
Manpower is definitely an important factor in the construction industry. However, lately, there are more open jobs than qualified candidates to fill those positions.
As mentioned previously, construction companies and firms need to deliver quality output so that clients can keep coming to them for their services. High-quality output requires expertise from experienced individuals. For instance, a construction site needs certified operators for heavy pieces of machinery like construction hoists to ensure efficiency and safety on the construction site.
There is a high demand for experienced construction employees creating a labor shortage in the industry. Most of the time, multiple firms have to compete with each other to get as many qualified candidates for their projects which means providing better wages and benefits for their leads. They also use the perks to retain their current employees.
This practice can help firms acquire talented candidates and keep the best employees in the business, however, it comes with a steep cost.
Much like with materials, the increase in labor cost will result in further squeezing profit margins. Construction companies will need to raise their prices.
Construction Equipment: Technological Advancements
Safety continues to be one of the main concerns in the construction industry and construction equipment is one of the common reasons for accidents on-site. However, things are changing thanks to technological advancements.
Aside from hiring a certified operator for heavy machinery, construction equipment safety has also improved because of new safety features thanks to technological advancements.
However, with new features comes great price increases. Considering the ongoing labor shortage in the construction industry, the last thing you want is to involve the construction professionals that you do have in a work accident. Investing in better pieces of equipment is a decision that should be taken seriously despite the cost.
Solving the Rising Cost in the Construction Industry
The construction industry cannot dictate what the environmental regulations should be, or set a lower tariff for construction materials. And construction firms cannot control the labor shortage.
Cutting costs on material, labor, and equipment may not be advisable, but there are some things that each construction firm can control to help the firms save money.
One of the solutions is to integrate technology into the company process. Although this option also requires investing some time and money for training and buying new technological items– the costs could be offset in the long run with efficiency and safety.
For instance, BIM or Building Information Modeling software can help in many aspects of the construction process. The software can help to cut costs, keep the project on schedule, and more.
New technology like wearable safety devices and drones can help keep sites safer and monitor for any risks or hazards for the employees.
As for heavy machinery, there are many types of equipment that you will need on a construction site, and buying all of them will cost the company a fortune. One of the cost-efficient options out there is to rent the equipment instead. That way, you get to use construction equipment with new safety features without breaking the bank.
Sometimes, the only choice is to adjust. Change is inevitable and resisting will only result in problems. The rising costs in construction materials, labor, and equipment may be alarming– however, they are necessary.
Since cutting costs on such important elements of the construction process is not recommendable, the only thing construction companies can do is be more cost-effective on other aspects of their process. Although these kinds of changes may sound troublesome, they can bring more projects and people in the long run. Embrace the change.