“Mitigating the Hidden Risks – In the “New Normal” construction environment
the construction industry, high risk to begin with, is operating in a new post-recession landscape, characterized by tighter margins and serious labor shortages with less room for error… Now more than ever, owners, contractors and designers need to increase risk awareness and risk protection.” (Manual of Construction Practices, 2018, Thomas C. Schleifer, PhD)
Risk Awareness and Protection
Let’s take a look at the risk factor, “serious labor shortages”, to see how construction industry professionals are dealing with this risk factor in the current market environment. In the article Impacts of the Current Workforce Shortage in the Construction Industry and Beyond, Rose Hoyle, Construction Risk Engineer lays out a thorough analysis of the causes and impact of the current labor shortage. Here’s a brief summary of her methodology.
Characterize the Risk
Hoyle’s analysis begins with a detailed characterization of the specific risk factor.
“The current workforce shortage is a veritable perfect storm of low supply due to downsizing from the recession, experienced workers aging-out, lack of interest from the upcoming generations, coupled with the high demand of the current construction boom which spans various market sectors simultaneously…
“In addition, risks pop up most specifically in Safety and Quality. The risks range from unskilled workers performing skilled tasks, new workers not trained in safety procedures, aging workers getting injured on the job, schedule slippage due to unrealistic expectations of available labor, and errors/accidents due to lack of adequate supervisory oversight…
“Contractors attempting to hedge the additional risk they are assuming by committing to project delivery in an uncertain labor environment…”
Shrinking Labor Supply
- Downsizing from the Recession – “Construction projects were suspended, postponed, or abandoned altogether, and rampant lay-offs ensued. These workers had to find new jobs…so many left construction and simply haven’t come back.”
- Experienced Workers Aging-out – “These masters of their art are approaching retirement age, and after toiling in the field…they are trading their hammers for a well-deserved set of golf clubs and riding off into the sunset.”
- Lack of Interest from the Upcoming Generations – “To say there’s a lack of interest in the craft trades by Millennials and Generation Z is putting it mildly…many have adopted their parents’ aspirations by seeking higher education so they don’t have to work construction for a living.”
Exploding Construction Demand
Multi-Family Residential – “urban living is cool again especially to the younger generation”
Senior Living/Assisted Living – “Great new medical advances are extending the human life expectancy.
Healthcare – “Advanced medical care and greater longevity translates to a greater need for facilities.”
Technology – “Apple, Google, Tesla, Amazon, etc. They have plenty of money and are building world-class facilities literally everywhere.”
Leisure and Entertainment – “There are currently more than 40 brand new stadiums/arenas in progress across the U.S., set to open in the next 3 years.”
Commercial Office Space – “An increase in corporate mergers and acquisitions is driving the demand for high-valued space in cities all over the world.”
Airports– “In an effort to modernize aging and outdated facilities, more than 50 U.S. airports could collectively account for up to $70 billion in construction projects over the next three years.”
Rebuilding After Weather Events– “In recent years we’ve seen unmatched destruction of property from natural disasters such as hurricanes, earthquakes, mudslides, wildfires, and tornados.”
Infrastructure– “Aging and ailing bridges, tunnels, roads, and water resources projects are also taking emergent precedence due to life safety.”
The techniques and research discussed are available to everyone and should be studied carefully if you’re not familiar with risk analysis. The first step in mitigating risk is recognizing that a risk exists and understanding the causes and effects of specific risk factors.
Read More: Dealing with the Construction Work Force Shortage