We are also facing a rising cost in construction labor . Because we have fewer people , there is a higher premium to pay

Best outcomes

It is true that some businesses fall prey to the assumption that a long backlog of work means the company ’ s future is secure . However , in the instance where materials costs rise , projects that have already been allocated a price point may be subjected to surprise adjustments , making budgets unpredictable . “ We need to look at the profitability of that backlog , otherwise rising costs can turn it into unprofitable or break-even work ,” he says .

For many contractors , the most devastating time in construction in recent history was the Great Recession in 2008 , which instilled the mentality that if leaders had work , they would be fine . “ Even if they weren ’ t making money , they believed that plenty of projects in the pipeline was a good scenario , which was a recipe for disaster . People found out the hard way that keeping the doors open doesn ’ t translate to profitability . This time around , everyone is a lot smarter about that .”

This new outlook on business is forcing companies to reconsider their approach to projects to ensure the best , and most profitable , outcome . “ Many of us are more meticulous about looking at the profitability of that backlog . In some cases , having a smaller backlog and less work can be more advantageous . We have had a wild couple of years regarding the rise and fall in cost . Last year , we had some unbelievable price increases across the board .

“ When 2023 came around , suddenly we still had some small rises in costs . However , in some areas they have come back down , so it forces contractors to dig into the details of that .”

Proactive processes

Another issue to take into consideration is the cost of labor . “ We are also facing a rising cost in construction labor . Because we have fewer people , there is a higher premium to pay ; tradespeople are requesting more . It ’ s unfortunate but sometimes that aspect goes

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