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More Work, Less Labor



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Earlier this year, AGC of America — together with multinational enterprise software giant Sage — conducted an annual survey and asked construction professionals for observations, practices and expectations for the year. The 2019 Sage Construction Hiring and Business Outlook Survey, based on more than 1,300 respondents, found that contractors are optimistic that the volume of work available to bid on will continue to increase. “On the whole,” says Steve Sandherr, AGC’s chief executive officer, “2019 should be a year of widespread opportunity.”

Members also expect labor to continue to be a challenge, and they are taking various measures to deal with the shortage, both in terms of recruitment and retention of qualified workers, and work-saving/time-saving technologies and techniques to cope with staff shortages.


In each of the 13 project-types broken out in the survey, there were more firms that expect work to increase than firms expecting it to decrease, referred to as the net positive percentage. For example, in water and sewer projects, there were 14 percent more firms expecting increase than those expecting decrease. Optimism varies somewhat, depending on the project type. According to Ken Simonson, chief economist, AGC of America, “Public building construction scored the highest net positive reading of 17 percent. Three other segments were nearly as high at 16 percent net positive: highways, kindergarten-to-12th grade schools and hospital construction.”

In response to increasing opportunities, most firms — nearly four out of five in the survey — plan to add headcount in 2019.

“However,” cautions Simonson, “much of that hiring is expected to be relatively modest in scope. Just under half the firms report their expansion plans will only increase the size of their firms by 10 percent or less. Only 7 percent of respondents plan to increase headcount by more than 25 percent.”

While contractors expect work to continue to increase in 2019, some openly acknowledge that the trend won’t last forever. Michael C. Brown, executive vice president and general manager for Skanska USA, a member of multiple AGC chapters, describes the Florida market in a way that echoes sentiments in many other parts of the country: “There’s no shortage of opportunities. I don’t see that declining for at least another year.”


In terms of the challenges that members expect to face in the coming year, the labor shortage continues to dominate the conversation. Forty-two percent of survey respondents expect it will continue to be hard to hire in 2019, and 26 percent expect that it will become even harder.

It is impacting costs and schedules. Over one-third of respondents report adding higher labor costs into their new bids and projects taking longer to complete. Eighteen percent report putting longer completion times into their bids.

Click here to view the outlook infographic.

In response to this challenge, members are employing a wide variety of strategies to recruit and retain qualified personnel. The most obvious incentive is financial, and 59 percent of firms report they increased base pay rates. Twenty-nine percent provided incentives and/or bonuses, and 24 percent increased contributions or improved employee benefits.

Another significant incentive is training. Workers want to advance, and training is broadly seen as a route to a better job. This is especially true for training that results in a certification. Firms offering their employees training in new technologies, and techniques such as Lean construction and collaborative methods, reap the benefit of having more highly qualified personnel and they attract talent in the process.

Attracting young workers into the industry is an existential issue. As John Doerr, senior vice president of Tarlton Corporation, an AGC of Missouri member, notes, “The workforce is getting older and not being replaced. Some who retired in the recession didn’t come back, and nobody’s going in.”

Technology itself is also an attraction, especially for young talent.

“People no longer expect their corporate systems to be cumbersome and difficult to use,” asserts Dustin Anderson, vice president for construction and real estate, Sage.

“Millennials and Gen Z — they’re in the workforce now, and they expect a consumer-grade experience in the corporate world. With cool technology, I think we can attract people to the workforce.”


The industry is also broadly exploring ways to reduce the need for labor. Technological solutions and non-traditional construction techniques can save time and work, and they are being adopted more rapidly. Anderson points to several results in the survey that show the trend: Forty-two percent of respondents say they currently spend 1 percent or more of revenue on IT, and 42 percent plan to increase IT investment in 2019. The areas with the largest planned increase in investment are project management software, document management software and estimating software. Fifty-three percent use online private collaboration software to keep their building teams in sync and improve financial and quality outcome, up from 46 percent last year.

“Outsourcing is one sign that contractors are taking a more strategic approach to IT,” Anderson observes. Ninety-one percent of survey respondents outsourced either IT or a business function such as network management, backup and disaster recovery and voice-over-IP, up from 77 percent last year. Even so, Anderson stresses that the percentage of revenue spent on IT in the construction industry is very low compared to other industries.

“I think that percentage will grow in the coming decade,” he adds, “because construction is ripe for a technological leap.”

The trend toward technology expansion is not limited to software, either. “The industry is a huge user of drones, for instance,” says Simonson, “allowing them to do things more quickly and more safely. Also, 3D printing and robotics are making headway in construction.”

The hardware that gives access to the software is increasingly present on the jobsite, not just in the office. Documents accessed through laptops or tablets in the field are common. “We have a big-screen TV on many of our projects,” says Doerr, “where workers will be able to go take a look at the most recent rendition of the drawings and pull up details that they need, which may have changed as recently as now!”

GPS location and laser measurement are increasingly present in the field, and they can be integrated with digital 3D models accessed through laptops, tablets and big-screens. Virtual reality (VR) applications allow personnel to move around the model, often accessible just by popping a smartphone into a simple cardboard stereo viewer.

Anderson suggests that the introduction of technological innovations is often initiated by the people in the field. “It’s very entrepreneurial. Companies typically have a standard technology that they deploy on a project, but the next generation of technology is starting to show up on one-off projects. I call them skunk-works projects, where a couple of folks get together and say, ‘Let’s use a drone on this.’ It’s not necessarily on the corporate radar. In some cases, it’s being led from the ground forces, not from the corner office.”

Anderson also believes that the technology being deployed now could raise productivity. “Construction hasn‘t had productivity gains in over 50 years; it’s flat. Other industries have seen a two-and-a-half fold increase. But I think we’re ripe for change. Technology is at a point where we can leverage it in construction to make productivity gains.”


Sandherr stresses that the AGC is working to steer the future in a positive direction.

“Our goal is clear: to ensure that the construction industry continues to expand in 2019 amid growing demand for new projects and an infusion of new and qualified workers. If that happens, the entire economy stands to benefit.”             

For a detailed account of the survey results, please visit