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
| Sep 9, 2014
Take a look at the hardhat of the future
A Los Angeles-based startup added augmented reality technology to a hardhat, creating a smart helmet.
| Sep 9, 2014
Frank Lloyd Wright's Annie Pfeiffer Chapel brought back to life using 3D printing
Restoration of the Frank Lloyd Wright-designed chapel was made possible (and affordable) thanks to 3D printing.
| Sep 8, 2014
First Look: Foster + Partners, Fernando Romero win competition for Mexico City's newest international airport
Designed to be the world’s most sustainable airport, the plan uses a single, compact terminal scheme in lieu of a cluster of buildings, offering shorter walking distances and fewer level changes, and eliminating the need for trains and tunnels.
| Sep 8, 2014
Trimble acquires Gehry Technologies, aims to create tools for linking office and job site
Trimble and Frank Gehry announced that they have entered into a strategic alliance to collaborate to transform the construction industry by further connecting the office to on-site construction technologies. As part of the alliance, Trimble has acquired Gehry Technologies.
| Sep 7, 2014
Ranked: Top state government sector AEC firms [2014 Giants 300 Report]
PCL Construction, Stantec, and AECOM head BD+C's rankings of the nation's largest state government design and construction firms, as reported in the 2014 Giants 300 Report.
| Sep 7, 2014
Hybrid healthcare: Revamping inefficient inpatient units to revenue-producing outpatient care
It's happening at community hospitals all over America: leadership teams are looking for ways to maintain margins by managing underutilized and non-revenue producing space. GS&P's David Magner explores nontraditional healthcare models.
| Sep 7, 2014
USGBC + American Chemistry Council: Unlikely partners in green building
In this new partnership, LEED will benefit from the materials expertise of ACC and its member companies. We believe this has the potential to be transformational, writes Skanska USA's President and CEO Michael McNally.
| Sep 7, 2014
Behind the scenes of integrated project delivery — successful tools and applications
The underlying variables and tools used to manage collaboration between teams is ultimately the driving for success with IPD, writes CBRE Healthcare's Megan Donham.
| Sep 7, 2014
Ranked: Top military sector AEC firms [2014 Giants 300 Report]
Balfour Beatty, Fluor, and HDR top BD+C's rankings of the nation's largest military sector design and construction firms, as reported in the 2014 Giants 300 Report.
| Sep 5, 2014
First Look: Zaha Hadid's Grace on Coronation towers in Australia
Zaha Hadid's latest project in Australia is a complex of three, tapered residential high-rises that have expansive grounds to provide the surrounding community unobstructed views and access to the town's waterfront.
