Critical shortage of labour and core materials

With ongoing shortages of skilled tradespeople across most fields, including carpenters, bricklayers, plumbers and electricians, the slogan of “build back better,” is quickly becoming farcical to all those in the industry.

Key findings from the FMB State of Trade Survey for Q3 2021 include:

  • 82% of builders have delayed jobs due to a lack of materials
  • 60% have pressed pause due to a lack of skilled tradespeople
  • Combined, 89% of builders have faced delays due to either materials or skills shortages
  • 42% can’t get hold of general labourers, up 6% on last quarter
  • 97% of builders are facing material price rises

While demand skyrockets due to working from home and stay cations, projects are stalling, wages are rising and material costs are rocketing through the stratosphere as supply chains are continuously disrupted due in no small part to COVID-19 and of course, BREXIT red tape.

Migrant visas are still locked down, almost turning the tap off for skilled labour from Australia, New Zealand and other similarly qualified industries. Throw into the mix the government’s aim of building 300,000 homes a year and it’s no surprise the industry on its knees.

Some 20% of all small and medium-sized businesses in the UK are construction companies. So with such a vital industry in the thumb screws, how can small business owners or managers plan their way through?

In this article we run through some of the steps you can take now to minimise the disruption to your construction business caused by these issues.

The Problem

Sooner or later you are going to run into a shortage of materials and products that you need on your projects. At the milder end, it may just be that you need to order a bit earlier than normal and things cost a bit more. But you may end up in the situation where you simply cant get what you need in time to complete the job in the given time.

What can I do:

  • Lock in material orders as early as possible with trusted suppliers – check in with them regularly to make sure they will turn up when expected
  • Run jobs as cost plus wherever possible to avoid the risk of material cost increases hitting your bottom line
  • Keep your project schedule up to date and let your subbies know ASAP if things change

Ironically, even though there is more work available than ever, you may end up with less revenue as projects stall and are delayed. Even worse your profit could take a big hit if you are running fixed price jobs.

The availability of human and material resources is an external factor that is mostly out of the hands of the small business owners. That is not to say that there are strategies to put in place to climb to the top of the procurement ladder, however the best strategy to survive in a hostile environment is to prepare, plan and be ready with the factors that you can control.

The Federation of Master Builders said that some building firms may have to delay projects and others could be forced to close as a result.

“Small, local builders are being hit hardest by material shortages and price rises,”

“We can’t build our way to recovery from the pandemic if we don’t have the materials.”

-said chief executive Brian Berry – The Federation of Master Builders.

Maximise your people

Owners/supervisors should make sure team members both understand their roles and responsibilities and feel motivated and empowered to carry them out. Get to know what motivates your team and leverage the skills at your disposal.

You may find that your apprentice is a whiz on a spreadsheet, or one of your electricians has a lorry that could save you on delivery delays and costs.

Focus 4 on productivity

1. Communication Flow

Communication is essential to every phase of any construction project. Establish an open flow of communications with all the stakeholders in a project, from the team on the ground, through to suppliers and the clients. The goal is for open and transparent communication to reduce the double handling of information and risk of delays or rework. Transparency helps manage conflicts as they are identified early and everyone is able to be focused on a solution rather than pointing the finger.

2. Planning

Always be prepared for any event, roadblock or resource constraint by continuously adjusting the plan as a job progresses. Anything can happen at a construction site and we all know that the same can be said for the industry itself right up to government level.

If the delivery of key materials is delayed, you will have to revise your schedule and shuffle everything around to minimise the impact. This could have a flow on effect to subbies which can create even bigger delays to the project

Using the communication flow in the step above you can coordinate with all the other stakeholders on a project to ensure the project remains on time, within budget and risks are minimised.

3. Budget Projects

In construction, materials, wages, consents, hireage and equipment needed for projects are supplied by mulitple vendors. From quoting/estimating through to the final invoice, it is vital to monitor and report all costs. Throw in multiple projects and the administration, allocation and management of costs becomes a fundamental part of remaining profitable.

Powerful, easy to use, tools are now available which provide a level of functionality that was previously only available to the larger construction firms. Using an effective job tracking application like NextMinute is vital in not only tracking costs across multiple jobs but also in ensuring appropriate margin is charged on materials and labour and that invoices go out, and get paid on time. Accurate, timely invoices are difficult to produce when your back office management is spreadsheets, paper and google sheets.

4. Track, Monitor, Report

Construction projects require constant concentration to maintain momentum and productivity meaning management is often on the job. This leaves little time to sit back and actually understand the health of any given project and whether they are in fact on time and on budget. Without accurate recording and reporting, jobs can quickly blow out and move from profitable to loss.

You can track everything on a spreadsheet, however, a construction job management system as mentioned in the step above can save dozens of hours of work (a week) collating timesheets, supplier invoices, receipts, material stock and team communication. Other reporting systems, such as safety and health management, can prevent hazards, track incidents, and streamline worksite analysis when issues do arise.

Conclusion

The current construction landscape there is a surplus of work with a deficit of resources. Improving process, workflows, people management and utilising job management software will allow a business to have increased visibility into resource availability to plan more effectively.

Most importantly for construction companies that want to grow, is understanding the capacity of both human and material resources which will allow the business to make informed decisions in order to take on more projects, increase revenue, and grow strategically with confidence and reduced stress levels.

References:

  • https://www.fmb.org.uk/resource/state-of-trade-survey-q3-2021.html
  • https://www.fmb.org.uk/news-and-campaigns/key-facts-and-figures.html
  • https://www.bbc.com/news/business-57247757
Published On: February 3rd, 2022 / Categories: Covid-19, General Tips, Latest News /

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