By Mark Drury
While we can’t know the future, as 2019 draw to a close, there are several predictions about what 2020 will bring. Some certainties we don’t expect to change anytime soon, but being aware of these forces allows you to strategically plan your approach and add in flexibility for what may lie ahead to accommodate areas for opportunity that may arise.
TOP 5 FACTORS
The “Top 5” factors to watch across the construction industry, now and into 2020, include:
Continued Labor shortage
This is a trend that affects all industries, nationwide, and is expected to continue in 2020, largely fueled by lack of qualifications among unemployed workers for available open jobs.
Increasing prices
In tandem with workforce shortages, prices of both labor and construction materials will climb in 2020. The key reasons for this are demand exceeding capacity, particularly if property owners want jobs done within a certain time period. This causes risk on the part of leadership and overtime costs if the construction company has a smaller pool of workers to accomplish projects on time.
Delayed project starts
Rising prices mean rising budgets for property owners. As a result, owners generally like to “shop around” to see if they can get a lower quote somewhere else and this takes time. Start dates can be pushed depending on how long it takes for a project’s budget to get solidified.
Company failure
It’s a natural part of the economic system that all companies do not succeed. As the economy changes and evolves, we are starting to see larger numbers of organizations fail, and the usual cause is they took on more capacity than they could execute. This again is a likely trend that will continue into 2020.
Residential bubble
Current situations indicate that over-building in the residential sector could signal a coming bubble. July 2019 broke the record for housing starts—previously held by July 2007—which has some experts anticipating a slowdown in the market and potential layoffs on the residential side of the construction industry. This also leads to opportunities for the commercial side of the business as talent will be freed up and infiltrating new projects, which can be a positive development.
ROADMAP FOR SUCCESS
So how do you take all of this information and use it to your company’s best advantage in 2020? Here are some best practices to make sure you’re positioning your company to succeed in the year ahead:
- Diversity is key. One tried-and-true path to success is to diversify your client and market base to maintain a substantial backlog of projects. This ensures that you will have a steady stream of demand and opportunity, no matter the market conditions. For organizations that have the majority of their client “eggs” in one industry “basket,” now is a great time to focus on diversifying and branching out to serve new markets and areas as a key growth vehicle.
- Go where the growth is. Going forward into 2020, there will continue to be growth in a number of key industries, the largest being data center, healthcare, defense spending, higher education, and K-12 sectors. The data center market holds large potential, although due to the risk-averse, sensitive nature of the work, this area also tends to be very exclusive and difficult to penetrate. Keeping apprised to these other growing areas can be a wise way to steer your company’s sales and lead generation strategies into 2020.
- Know your capabilities and keep it real. Be realistic about your goals, limitations, and potential of your workforce and be careful not to bite off more than you can chew project-wise.
- Planning is everything. Create a master schedule of your project backlog to allow you to proactively anticipate the ways you will apply your resources and leverage your talent.
- Keep your eye on the bottom line. Understand where your costs are and where they are escalating.
- Build your talent pool. Your talent is the core of your business, and essential to its ongoing success and growth. Continue to hire and strive for the best.
- Train and educate your people. The decision to invest in your company and your people is one of most advantageous you can make over the life of your organization. They are the life-blood and the future, and it’s a good idea to treat them accordingly, whether through professional development opportunities, mentoring, team-building, or other activities.
CLOSING THOUGHT
While fears about the unknown are inevitable, by all accounts, 2020 looks to be brimming with potential and opportunity. In any market climate, it’s important to keep a realistic grip on your goals and build in flexibility for change and adaptation into your plans to allow you to greet uncertainty and welcome the opportunity it can bring.
About the author
Mark Drury is the vice president of business development at Shapiro & Duncan. He brings more than 40 years of experience in construction management and oversees the company’s corporate development, contracts negotiation/management, and production of marketing and sales materials. For more, visit www.shapiroandduncan.com.
Modern Contractor Solutions, December 2019
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