Gilbane Building Company announced the Summer 2014 edition of its in-house economics report, Building for the Future — Construction Economics: Market Conditions in Construction. The report predicts rapid growth coupled with the lack of skilled, experienced labor and the ability to meet schedule will be some of the most important industry issues to address over the next few years.
“The good, if not, great news is that the most favorable, forward-looking conditions support expectations for strong industry growth in 2015,” said Ed Zarenski, a Gilbane estimating executive with more than 40 years in the construction business. “Very active markets will drive escalation to climb more rapidly than we have seen in six years.
“The challenge of anticipated workforce shortages will have a detrimental effect on labor cost, productivity, the ability to readily increase construction volume and the ability to complete projects on time," Zarenski added.
While construction spending for 2014 will finish the year 5.5% higher than 2013 and the unemployment rate in construction is down to 7.5%, the industry has been losing workers for more than five years, falling to low points in the third quarters of both 2012 and 2013.
Going forward, as the workload expands rapidly, the significant shortage of available skilled workers, as well as management-level personnel, will impact productivity and force extended work schedules. The report notes total construction spending will increase 7% for 2015, which is a good sign for future hiring, but highlights the need for workers to have the right training and skills.
Other report highlights include:
-
The workforce has never grown as fast as what will be needed to accommodate the rate of new construction growth predicted. Rapid workforce expansion leads to productivity losses.
-
Construction jobs are up 600,000, or 11% from the low point. However, new jobs plus added hours worked for the entire labor force shows total labor is up 18%. That means 40% of the total gains in labor in the past three years is due to added hours, not new jobs. That is the equivalent of nearly 400,000 jobs.
-
The average annual rate of new nonresidential construction starts for the most recent four months is $197 billion. The average for the same four months one year ago was $146 billion. It is expected to be higher in the next four months. This large increase in starts will result in a rapid increase in nonresidential buildings spending growth in the second half 2014 through 2015.
-
Residential construction will increase 12% in 2015, but non-building infrastructure will decrease 5%. Nonresidential buildings spending will grow 11%, led by commercial and office construction, both expected to be up 15% in 2015.
The report is available here.
Related Stories
Sponsored | | Sep 13, 2014
Right Way Plumbing finishes first at Max Planck Florida Institute
The Max Planck Florida Institute consists of a three-story, 100,000-sf scientific research facility with 30,000 feet of copper joined with Viega ProPress fittings.
| Sep 12, 2014
Total immersion: Has virtual reality's time finally come?
The emergence of low-cost VR technology means that anyone with a few hundred bucks and a decent workstation can get in the game. But, as our experts reveal, pulling off VR is not so simple.
| Sep 12, 2014
Will on-site parking remain king in the development world?
In spite of the trend away from multi-car residences, not much has changed with regard to parking spot allocations within apartment buildings and other multi-unit residential developments, writes GS&P's Doug Sharp.
| Sep 11, 2014
5 competing designs unveiled for Presidio Parklands in San Francisco
To turn the underdeveloped area by Chrissy Field into new public space, San Francisco's Presidio Trust unveiled the five designs by five teams they invited earlier this year.
| Sep 11, 2014
Cintas invites public to vote for 'America's best restroom'
For the 13th consecutive year, Cintas Corporation is back with its popular America’s Best Restroom Contest. A team of survey editors once again scanned the country for the most creative and clean public restrooms and produced a crop of nominees sure to please.
| Sep 10, 2014
Ranked: Top transit facility sector AEC firms [2014 Giants 300 Report]
Leo A Daly, URS, and Skanska head BD+C's rankings of the largest transit facility sector design and construction firms, based on the 2014 Giants 300 Report.
| Sep 10, 2014
Must See: Shape-shifting architecture that responds to heat
Students in Barcelona have created a composite material using shape memory polymers that can deform and return to their original state when activated by cues like heat, humidity, and light.
| Sep 10, 2014
Lessons for the shore: Bolstering resilience of the built environment
Nearly 32 million people, or 28% of the East Coast's population, live in areas lying within a mile of a shore line. The good news is that municipalities are starting to take action, writes Sasaki Associates.
| Sep 9, 2014
Using Facebook to transform workplace design
As part of our ongoing studies of how building design influences human behavior in today’s social media-driven world, HOK’s workplace strategists had an idea: Leverage the power of social media to collect data about how people feel about their workplaces and the type of spaces they need to succeed.
| Sep 9, 2014
Ranked: Top religious sector AEC firms [2014 Giants 300 Report]
Brasfield & Gorrie, Gensler, and Jacobs top BD+C's rankings of the nation's largest religious sector design and construction firms, as reported in the 2014 Giants 300 Report.
