The Biggest Construction Industry Problems of 2021 Solved

Running a construction business comes with its own set of challenges, even in “normal” times. But the events of 2020 and 2021 have presented even more roadblocks, headaches, and obstacles for artisan contractors than ever before.

Here are the biggest construction problems contractors are facing in 2021 and creative ways to overcome them.

New OSHA Regulations

OSHA protects workers by setting and enforcing standards, as well as providing training, education, and outreach across many industries. Since the construction industry happens to be high-risk, keeping up with OSHA regulations can be a real pain in the asphalt on a good year. Add in new COVID-19 regulations from 2020 and 2021 and, well, let’s just say construction safety managers have their work cut out for them.

Solved: How to Deal with New OSHA Regulations

This one is quite simple when you break it down. One: stay informed of all new regulations so you’re not caught unaware of a requirement. Two: execute.

Just do it.

Now we all know the reality is that keeping up with OSHA requirements is a lot more complicated than this one-two approach. But making it a priority to stay informed of, and implementing, new regulations can keep your workers safe and keep you out of hot water.

Where to start? 

Check out this list of the top 10 most frequently cited OSHA standards and then head on over to the 2021 OSHA COVID-19 guidelines.

Challenge: Increased Material Costs

Between coronavirus lockdowns and the 5-day Suez Canal blockage, supply chain disruptions have become the norm. Unfortunately, the price of construction materials has increased between 2020 and 2021. And two of the most important materials have risen the most:

  • Lumber costs increased by 400% this past year
  • Iron and steel costs increased 15.6% this past year

The National Association of Home Builders reports a single-family home is now $16,000 more expensive due to lumber prices alone. Commercial builders are feeling the impact of rising iron and steel prices.

Solved: How to Deal with Price Increases

One way to manage the (steep) increase in material costs is to make sure your contract contains clauses that pass the increases on to the owner, so you’re not left holding the bill.

An escalation clause is a provision in a contract that calls for adjustments in fees, wages, or other payments to account for fluctuations in the costs of raw materials or labor. Have your attorney review your current contract and ask for their advice about including an escalation clause to protect your bottom line in the face of rising material costs.

While a contractual clause could protect you from rising material costs, it doesn’t do anything to cover you against material shortages.

Expect the unexpected this year and have a backup plan in place for possible material shortages. Hedge your bets and require price holds and guaranteed availability from material suppliers. Now may not be the time to wager on the least expensive supplier; stick with your trusted material providers, even if they come with a higher price tag.

Lastly, build up cash reserves. Cash will solve most of your problems, most of the time. 

Set a small percentage of your income (anywhere from 1% - 10%) diverted directly to your cash reserve account. Automate this process so you don’t even have to think about it. 

Make sure you’re not overpaying for business insurance, either. Look for ways to save on your contractor insurance policies so you have more cash on hand (without degrading your coverage).

Challenge: Skilled Labor Shortages

No matter the year or circumstance, shortages of skilled labor are a consistent challenge in the construction industry. And this past year is no different.

In 2021, construction companies will need to hire 430,000 more workers than they employed in 2020, according to an analysis of U.S. Bureau of Labor Statistics data released by Associated Builders and Contractors.

"According to forecasts analyzed during the COVID-19 pandemic, an impressive 430,000 more construction workers still need to be hired in 2021 to meet the demand, evidence that the construction industry is powering America’s recovery and economic engine," said ABC President and CEO Michael Bellaman.

Solved: How to Deal with Labor Shortages

Solving this pervasive problem of labor shortages will take time, energy, and financial investments on the part of construction owners and managers. Here are a few ways you can get more trained workers on your team.

Educate: Not everyone realizes that construction can offer solid wages and benefits. The average carpenter earns $53,150 a year, while the average construction manager earns over $100,000. Educating would-be workers about the financial opportunities available in the construction industry can help widen the pool of potential workers.

Train: The better-paying construction jobs typically require training, certification, education, a license, or some combination thereof. Instead of waiting for qualified people to come to you, invest in apprentice programs for laborers with less experience. Help upskill your existing labor force so they can achieve higher-paying roles within the industry.

Incentivize: Look outside of the construction industry for examples of incentives that attract more skilled workers. For example, Kaiser Permanente offers a student loan repayment program, paying off $10,000-20,000 of student loan debt for its employed doctors and other medical professionals. Kaiser also provides tuition reimbursement for employees who want to continue their education. 

Retain: Losing valuable employees makes it even harder to build out a strong and competent workforce. By some estimates, it costs a company an average of 6-9 months’ salary to replace a worker. Replacing a $60,000 worker could cost you $30,000 - $45,000 in recruiting and training costs! Keep your employees happy with incentives, bonuses, benefits, training, and promoting from within.

Aggressively Recruit Women: Women only make up 9% of the workforce in the construction industry and less than 3% of skilled workers. Forward-thinking leaders need to step up efforts to proactively recruit, train, and provide apprenticeships to women. Massachusetts aims to have women make up 20% of its construction workforce and created the Massachusetts Girls in Trades group to help educate female students in middle and high school about the opportunities available in the construction industry.

What Are Your Biggest Challenges in 2021?

This is a shortlist of the biggest challenges facing construction owners and artisan contractors in 2021, but it doesn’t cover everything. If you need help with a challenge plaguing your business, call one of our construction insurance professionals at Aegis Insurance Markets. We can help you strategize ways to save on insurance, reduce risk, and increase cash flow for your business.




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