Positive outlook, higher costs beg for greater efficiency

by Clair D. Urbain

Readers are the lifeblood of this magazine, and we tap into your expertise and opinions regularly to assure our stories are on the right track and address key topics.

Market reports indicate that in most areas of the country, construction is very healthy, and a recent survey of our readers shows that’s absolutely true.

When we asked readers what their outlook is for construction in the next 12 months, one-quarter of the respondents said their work volume will increase 20 percent and nearly 60 percent forecasted that work volume will increase at least five or 10 percent. Only 15 percent indicated that work will remain flat, and less than three percent indicated that work volume will decline by any amount in the next 12 months.

That’s pretty good news for contractors, but that bright outlook for work is clouded by concerns over material availability and cost and fuel prices. Eighty-five percent of the respondents report that the challenge of raw materials cost will have a large or great effect on their businesses in the next 12 months and 70 percent of the respondents said that raw material availability will be a large or great challenge in the next 12 months.

Finally, 83 percent report that fuel prices will have a large or great effect on their businesses in the next 12 months.

Fifty-four percent of the respondents report the challenge of finding qualified labor will have a large or great effect on their work in the next 12 months.

If my economics instructors taught me correctly, that indicates, as an industry, we are heading into the territory of increasing demand for services and lower supply which should drive costs and prices higher.

That means estimators will be shocking building owners with higher building cost estimates. Contractors who aren’t savvy could end up eating the difference. That’s a bad place to be – work that costs you money!

Commercial construction has always been extremely competitive, and this strong demand our readers forecast bodes well for firms that can balance the heavy workload with the increasing costs of materials.

To that end, efficiency is key, and we are looking to help contractors become more efficient in what they do.

That’s why we’ve developed the upcoming Lean University – Construction seminar. We’re bringing together experts who understand how to identify and reduce waste in contractor organizations plus have three commercial contractors share how they successfully implemented Lean concepts and the results they have achieved.

Our first Lean University – Construction seminar is on October 24, 2006 near Chicago O’Hare. Find out more on page 8. Register soon because seats are filling fast!

Published in the July/August 2006 issue of Contractor Tools and Supplies magazine.

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