6 Minute Read
February 24, 2022
March was another busy month for the construction industry, and a mixed bag of good news and areas of concern. Short term supply chain challenges increased, but longer-term outlooks appear stronger. Construction jobs are up and employment is down. Changes could be coming to prevailing wages. And, why isn’t modular construction booming? These are just some of the headlines we followed in March.
The construction industry, already faced with rising material prices and limited supplies during the last two years of the pandemic, could soon see additional impact. Russia’s invasion of Ukraine, and the subsequent economic sanctions that have been imposed, mean rising prices and reduced supply for oil, gas, metals, timber and much more.
Without access to some Russian resources, there is more demand to find these materials from other countries or boost domestic production—all while incurring additional costs. There is some good news, however. With pandemic restrictions easing throughout most of the world and production and transportation ramping back up, some of the supply chain issues are showing signs of beginning to ease. Even oil, which jumped to well over $100 per barrel in the early days of the invasion and sanctions, has now eased to below $100 in late-March trading.
The Takeaway: While the sanctions will definitely have some short-term impacts, the supply chain issues we’re seeing now should continue to improve over the next few months. Yet, as the pandemic showed, companies find ways to adapt. From streamlining construction technologies and processes to improve productivity, purchase smarter and reduce material waste to more sustainable building practices and new ideas, like MIT’s recent innovation of using 3D scans to repurpose wood scraps, contractors can become much more agile to meet global challenges head on.
A mid-March announcement of a number of proposed 2022 changes to the Davis-Bacon Act by the Department of Labor (DOL) means that the definitions and compliance requirements with prevailing wages that contractors have been familiar with could soon be changing. The DOL proposed returning the definition of "prevailing wage" under the Davis-Bacon Act to one last used nearly 40 years ago, before it was changed during the Reagan administration, which argued the old definition contributed to inflation. The DOL said this would ensure prevailing wages reflect actual wages paid to workers in the local community.
Other proposed changes included updating how prevailing wages are calculated in order to keep up with actual wages in the locations work takes place, providing broader authority to adopt state or local wage determinations when certain criteria is met, updating regulatory language to better reflect modern construction practices, and strengthening worker protections and enforcement, including debarment and anti-retaliation.
The Takeaway: Whether or not the DOL’s proposed changes are enacted, the Davis-Bacon Act will continue to play a significant role in future construction and infrastructure projects fueled by federal funds. Keeping up with prevailing wage laws and ensuring compliance will be crucial to winning future work. Those contractors with the modern solutions and workflows in place to do so will be the best poised to succeed.
According to a new report released by the Bureau of Labor and Statistics, the construction industry added 60,000 jobs in February, recovering nearly all of the jobs it lost in earlier stages of the pandemic. As ENR notes, “construction’s total employment reached 7,613,000 in February. That is only 11,000 jobs, or less than 1%, below the industry’s pre-pandemic peak of 7,624,000, reached in February 2020.”
Specialty trade contractors led the way, adding 44,200 new jobs. Building construction employment added 8,900, while heavy and civil engineering construction, which includes infrastructure work, added more than 7,300 during February. The construction industry’s unemployment rate also declined from 7.1% in January to 6.7% in February.
The Takeaway: This is excellent news for the industry. With so much work-and potential profit-ahead for contractors it’s good to see the job creation and scaling of operations to meet the demand. Now, filling all of these roles remains a challenge as labor shortage woes continue, but as contractors continue to modernize and create attractive construction career paths, this too should start to ease.
It seems that one of the most innovative and potentially transformative construction practices—modular building, or prefabrication—is struggling with industry-wide adoption in the United States. Construction Dive published a deep-dive around modular construction in March noting that, despite being around for years now, modular construction only accounted for 5.5% of all construction last year.
Changing entrenched construction processes, learning curves and issues with implementing prefabrication into increasingly complex construction projects all contributed to the slow adoption, the article noted. That said, modular and prefabrication is still a growing practice, and it has made significant inroads in the hospitality construction industry in recent years.
The Takeaway: The benefits to modular construction are clear: better control over work and productivity; reduced risks like safety, delays due to weather and more; more collaborative workflows; and increased profits. That said, it’s surprising to see the slow adoption, especially given the rapid adoption of other technologies and innovative workflows over recent years. Modular has been a huge driver of success among UK contractors. Check out this ebook on Connected Modular Construction to learn why.
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