As we near the end of 2022, the larger economic climate is one marked by uncertainty and, for many, trepidation. With inflation and interest rates both at record highs–and the supply chain issues and worker shortages spurned by the COVID-19 pandemic still looming nearly three years later–stakeholders in the construction industry are understandably concerned about how these trends will continue to impact their businesses into 2023.
While it is impossible to predict exactly what the next year will bring, here are a few of the trends we at Odin predict will have the largest impact on the construction industry in 2023.
- Financing challenges will delay - or eliminate - many projects…
Top of mind for many as we move into 2023 is how the slowdown in outside investment could slow the progress of existing projects, and delay or even halt new projects scheduled to break ground in the new year.
In response to rising inflation and interest rates, the latter half of 2022 saw outside investments slow radically across many sectors. It stands to reason that securing new growth capital in a market that relies on two of the day’s most volatile line items–labor and raw materials–will be even more challenging, and more competitive, than it has been in previous years.
…and The Infrastructure Act will determine what kinds of projects are funded
Congress recently passed the Bipartisan Infrastructure Law (Infrastructure Investment and Jobs Act), which was touted by President Joe Biden as a “once-in-a-generation investment in our nation’s infrastructure and competitiveness.” While this legislation will create a significant amount of new jobs in construction–with official estimates putting that increase at around 175,000–those new roles will be concentrated around key focus areas related to improving infrastructure. This will likely include building bridges and roads, upgrading airports, ports, and other investments in public transportation.
- Worker shortages will continue to impact project scopes and timelines…
Even three years into the global pandemic, the dwindling supply of skilled workers to backfill a growing number of vacant roles remains a top concern among stakeholders in construction.
In February of 2022, open jobs in the industry totaled nearly 400,000 according to data from the U.S. Bureau of Labor Statistics, an increase of about 60,000 from levels we saw prior to the pandemic. And while recent data on community college enrollment shows a 5% uptick in entrants to the trade between 2019 and 2022, this does not solve the problems of today, nor is it a large enough number of new entrants to meet the growing demand in the labor market.
…as will rising material costs
In an industry where profit margins are already thin, the dramatic increases in the cost of raw materials caused by inflation are hurting the bottom lines for developers and contractors across the country. All levels, from those working on smaller residential projects, to those managing multi-million or multi-billion dollar projects will feel the effects. In an attempt to get ahead of unpredictable price hikes, the bidding process has become increasingly more complex and high-stakes for those developers and contractors who typically have to eat them.
While it is always advisable to review project budgets against current pricing, an increased level of vigilance in this area during this time of extreme volatility could prevent catastrophic losses. If possible, discussing a risk-sharing arrangement that would distribute unanticipated cost discrepancies on a project between contractors, subs, and project owners could also be a mutually beneficial tactic to keep projects moving even in the face of volatility.
How can Odin help project owners navigate challenges for a profitable 2023?
Odin is an integrated solution for workforce risk management, upleveling your operations from safety and security to labor and payroll. Odin’s construction partners will have a distinct advantage in navigating the unique challenges we predict for 2023.
Here’s how we can help:
- Improving workforce visibility to help you manage timelines more efficiently
Odin’s platform gives stakeholders unprecedented visibility into their workforce, making it easier to spot–and eliminate–waste, and to most effectively distribute and schedule a limited amount of workers across a project, even under the most unforgiving roadmaps deadlines.
- Reign in labor costs by managing workers across contractors
With inflation continuing to rise, there’s never been a better time to tighten your belt, fill in cracks, and patch holes where money tends to leak in your projects. Tightening up labor costs is a huge opportunity you can’t afford not to take advantage of in 2023, and Odin can help you do just that. Partners on our platform have the ability to manage all of their workers across different contractors and projects all in one place, ensuring that the right amount of workers are being deployed to the right projects, and that they are working the expected amount of hours.
In addition to the benefits outline above, our construction software platform and proprietary technology can improve safety, reduce risk, and lower costs on sites in a number of ways, including:
- Streamline onboarding and digitize worker documentation
- Visualize workforce data and generate reports seamlessly
- Secure sites with integrated physical access control options
- Reduce risk on site and support incident investigations
If you’re ready to make 2023 a banner year for your business, we’d love to work with you.