CONSTRUCTION During construction, we manage tasks related to on-site activity and ensure that we proactively communicate with the construction team, and that we adhere to weekly schedules, delivering day-to-day objectives that ensure the project is completed on time.
CONSTRUCTION SITEWORK The first order of construction is to complete preliminary sitework, which includes grading to manage the flow of water across the site and includes the retention or detention required. Sitework also includes getting wet and dry utility subcontractors to the site.
SHELL BUILDINGS A shell building separates the building’s interior space from the exterior surrounding areas, provides structural stability, and includes the foundation, doors, windows, footers, and roofing. A mix of materials may be used in the construction of the shell, including stone, wood, concrete, metal, masonry, and glass. The core (the elevators, restrooms, and utility closets in the middle of the building) is typically constructed with the shell.
TENANT IMPROVEMENTS The tenant improvement (TI) build-out takes the raw space and turns it into the inviting space that our clients desire. This includes all interior finishes, cabinetry, flooring, and other fixed items.
To put it very simply, construction materials are in short supply. Natural disasters, manufacturing and production setbacks, logistical bottlenecks, labor shortages, as well as political instability have conspired to produce what several sources call a “perfect storm” of delays and frustration for general contractors. Domestic instability and global politics are at the forefront of the biggest threat to recovery for the construction industry, which is the sourcing of building materials.
CONSTRUCTION SUPPLIERS Many companies in the construction materials supply chain remained closed at the beginning of the lockdowns, either because they were deemed nonessential, or as the result of other restrictions. While many construction suppliers have resumed their operations, they have not seen their capacity reach pre-pandemic numbers due to a shortage of workers. This was most evident at the Port of Los Angeles where the Biden Administration just negotiated a deal to keep the port open 24-hours a day and for seven days a week.
HOARDING OF BUILDING MATERIALS Many construction firms have been hoarding materials instead of relying on “just-in-time” delivery, further adding to their scarcity.
HOARDING OF BUILDING MATERIALS Many construction firms have been hoarding materials instead of relying on “just-in-time” delivery, further adding to their scarcity. Seventy-five percent of construction firms experiencing project delays cite shortages of building materials and delivery delays as the main reason. Non-government projects may also have a hard time sourcing building materials with the recent passage of the Infrastructure Investment and Jobs Act.
WHAT IS A FULL-SERVICE CONSTRUCTION FIRM? For anyone that passes a construction project every day on their way to or from work, it’s no secret that it is a very involved process that takes months and, sometimes, even years to complete. This is just the nature of the construction industry. However, there is an emerging trend that shows certain firms have opted to bring some of the needed services for their projects under one roof in order to streamline this process.
Full-service construction firms are making it easier not only on the client, but on themselves as well. In rearranging their business model to include services that would normally be outsourced, communication becomes much more fluid and reliable.
Below are the major components of what make up a full-service construction firm:
BUSINESS DEVELOPMENT Business development professionals are there to help clients navigate the design-build process, from concept all the way through a firm’s respective warranty period and beyond. These project champions advocate for you from Day 1 and help you navigate each project milestone.
ACCOUNTING The firm’s accounting teams will work with clients from start to finish and make a meaningful difference through consistency and accuracy at the financial level. Billing is coming from a single source, alleviating some of the bookkeeping stress for the client.
DESIGN/ARCHITECTURE Perhaps what is the most important element of bringing everything under one roof is that the design team will be the true catalyst that brings the client’s vision, wants, and needs to reality. They work to create spaces that fit within the budget constraints, while still imparting as many of the client’s desires into the building as possible. Value engineering is important to get the most for each dollar spent, and the design and construction teams begin collaborating immediately to give each client the most design possible for the budget.
ENGINEERING The phrase “design build” is somewhat misleading, considering everything that it entails. One of the most vital elements of that process is the engineering. The collaboration between architecture and engineering, on a daily basis, is an invaluable resource for this single-source method.
ESTIMATING Estimating teams approach each project knowing that clients need to view a firm as accountable for every development cost they will incur during the design and construction process, including entitlements and permitting. Firms with their own estimating team foresee what other general contractors do not and educate their clients on the types of costs that often slip through the cracks in conventional design-bid-build scenarios. Having an estimating team working hand-in-hand with the architects and the general contractor ensures that everything is being done to complete the project on or under budget.
CONSTRUCTION Construction is where architecture and estimating come to life. By staying at the forefront of construction technology, a good construction team looks to deliver quality while letting the client focus on running and growing their business. Speed is always crucial and it can be achieved at the highest level when the general contractor has been dialed into a project from Day 1. This is facilitated by the architect and estimator being available to each other at a moment’s notice.
Commodity prices have been increasing across the board. Overall construction costs for the 12-month period through the end of August 2021 rose by 4.5 percent, with material costs leading the way with a massive increase of 23.1 percent. Many products, as well as trucking services, contributed to the extreme runup in construction costs.
GEOPOLITICAL EFFECTS ON CONSTRUCTION As the world awaits the next moves of Vladimir Putin, the construction industry is bracing for what seems like the inevitable invasion of the Ukraine by Russian forces. If this conflict is anything like wars in the past, we can expect the costs of building materials to rise significantly. During the Iraq war, the price of lumber soared. Even though it is unclear what the United States’ involvement will be, if any, general contractors can still expect a chain reaction to some degree.
The positive trajectory of the construction industry in Arizona and Texas is continuing. We’ve been fortunate in that the sectors in which we build have continued to grow. There were some sectors, including office and retail, that were impacted heavily by the pandemic, but indicators show that 2022 will rebound for those sectors as well.
CONSTRUCTION LABOR Training and mentorship is filling the skilled labor gap at LGE Design Build, increasing employee retention. Additionally, compensation is on the rise, making the construction trade a more attractive employment option. Total employment is expected to grow by 1 percent annually, with the fastest job gains occurring in the construction sector.
SUPPLY CHAIN Consumer demand will remain high. However, the manufacturing sector grew in November 2021 for the 18th consecutive month, slightly improving the supply chain. Supplier deliveries will be decreasing at a slower rate, but backlogs will continue to grow. The lack of raw materials will continue to affect every construction sector.
Labor markets continue to present challenges, and the effects are being felt across many sectors of the economy. In the construction industry, employment is nearing pre-pandemic levels, while demand for architectural work and construction is growing.
The numbers may indicate that full recovery is within reach, but many general contractors are still struggling to fill the more skilled positions for their construction projects.
YEAR-OVER-YEAR CONSTRUCTION LABOR TRENDS From September of 2020 to September of 2021, the construction unemployment rate dropped from 7.1 percent down to 4.5 percent. This decrease in the construction industry is slightly larger than the overall unemployment rate, which dropped from 8.3 percent to 6.3 percent over that same time period.
LACK OF WORKERS TO FILL CONSTRUCTION JOBS Despite construction unemployment numbers dropping, many general contractors are having trouble finding skilled workers to round out their crews. However, many construction firms are filling their vacancies for laborers, which is at least one encouraging sign.
THE EFFECTS OF CONSTRUCTION LABOR SHORTAGES Just under 90 percent of construction firms reported project delays. More than sixty percent of those firms are attributing those delays solely to a shortage in the workforce. Not only is the construction industry experiencing a labor shortage, but so are the industries upon which they rely to source their building materials. This is causing longer lead times on those materials and overall delays on construction projects.
THE SOLUTION To combat this issue, it is necessary for many general contractors to seek other, more creative solutions. Many contractors have increased their pay to attract better talent and created more extensive training and mentorship programs in order to retain that talent.
