Market unnoticed , and it can be devastating to a labor-intensive contractor in the instance when they don ’ t have a handle on their rising labor cost , bidding work at a traditional labor rate , without realizing their cost has gone up four to five dollars an hour .”
The combination of these factors has resulted in what John describes as stagflation . “ Rising costs is probably the biggest contributor . Contract prices are fixed at the start , yet cost goes up throughout the duration of the contract .” This will inevitably impact certain aspects of projects , such as the supply chain . John advises that businesses should consider ways to quash price escalations in order for cost increases to come as less of a surprise to customers . “ In this way , we are not stuck burying costs . I think it is going to lead to contractors being more proactive in securing the materials up front .
“ Obviously the longer the project takes , the more you are at risk of materials changing during the life of the contract . We may have more people looking to secure material prices as a result , and earlier rather than later , so they are protected from a price increase . I know contractors who played the price market . Copper is a great example of this . When copper prices were all over the board , if you were a contractor who depended heavily on copper pipes and fittings , you needed to know how to manage that demand . I know many contractors who were very successful in making money in that fluctuation in price during the contract by playing the market .”
John agrees that companies need to have a better understanding of their cost structure in order to prevent drastic changes to set contract prices . “ Everything from material to labor is constantly moving , and we can ’ t assume that we have a good handle on that . We have to have a good process in place . We have to be forward looking and proactive , rather than reactive . I think the best-in-class contractors do a much better job at knowing where they are today and where they are going to be before the job is completed . Then , they share that information with the owner of the project , and make sure that they don ’ t run into schedule delays . If they go over budget , it impacts everybody , not only the company and the internal team , but also the ability to finish the job on time , and it can snowball from there .”
Future workforce
The industry has an opportunity to learn from the last two years , and set a higher and more secure standard for the engineers and contractors of tomorrow . “ I am from the baby boomer generation ,” John shares , “ so I know what it was like in my day when people were getting into the construction industry . Unfortunately , we didn ’ t do a very good job with the millennials . We must realize what today ’ s worker wants . So , I think the opportunity to do that and provide an unbelievable career path for people is critical . I am optimistic that we can , and if we do the right thing , we will get a lot of good people in the industry , which will keep us moving forward .”
In bringing the conversation to a close , John highlights that the number one goal going forward is to get young people more excited about the industry . “ We have to not only get to the younger generation , but we need to get them excited about this work . We must diversify the labor in the industry as well . Construction historically has been a predominantly white , male-dominated industry . We have to get more women involved , and more underrepresented minorities . If we do that , that gives me the biggest hope that we will see a different work force in the future , and I think it is going to be really exciting ,” he concludes . ■
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