Labor Shortages in Contractor Management


The shortage of skilled contractors is a growing concern for businesses across various industries. With a limited pool of qualified contractors, companies experience increasing labor costs, putting pressure on profit margins, and causing elevated project expenses, forcing companies to adjust their contractor management strategies.

The Urgent Need for Skilled Workers in Construction

The construction industry is one of the sectors that consistently faces a demand for skilled contractor workers. According to the Associated Builders and Contractors, the construction industry will need to attract an estimated 546,000 additional workers on top of the normal pace of hiring in 2023 to meet the demand for labor. This increased demand is added to the current level of above-average job openings, indicating a significant shortage of qualified workers.

The industry unemployment rate of 4.6% in 2022 was the second lowest on record, higher than only the 4.5% unemployment rate observed in 2019, indicating that few construction workers are seeking jobs, leading to a shallow pool to fill the demand for labor. Moreover, nearly 1 in 4 workers in the construction industry are aged 55 and above, meaning retirements are swiftly depleting the workforce.

Project delays, increased workload, and rising labor costs are some of the consequences of the shortage. The scarcity of experienced workers has forced companies to turn to less-experienced or inadequately trained contractors, impacting the overall quality of work and leading to financial penalties and disruptions to project planning.  

Using inexperienced or unqualified workers in high-risk environments can lead to a surge in workplace incidents, resulting in not only lost time but also potential loss of life. Safety violations further expose companies to legal liabilities and financial penalties from OSHA. As the industry grapples with the shortage of skilled workers, a relentless commitment to contractor safety management becomes a non-negotiable cornerstone for responsible work practices.

How to Avoid Contractor Shortage

Addressing labor shortages in contractor management demands a multifaceted strategy.

  1. Retaining top talent, including ongoing training for existing contractors, is essential to address the need for qualified workers, reducing the impact of the shortage on project timelines and work quality.
  2. Early contractor involvement, including pre-planned recruitment, counters labor shortages and predicts future labor capacity. Proactive workforce planning months or years ahead prevents staffing complications, offering contractors foresight to manage constraints. This early involvement also identifies and addresses skills gaps through training and apprenticeship programs, fostering qualified workforce development.
  3. Maintaining a ready roster of skilled contractors ensures swift response when shortages arise, preventing disruptions in project timelines. Platforms such as Appruv enable the creation of a centralized database for pre-approved contractors, facilitating swift mobilization of skilled workers during labor shortages to minimize disruptions and delays.
  4. Investing in technological solutions offers multiple benefits for addressing the contractor workforce shortage. For example, cloud-based software can identify laborers’ skillsets and qualifications, enabling leadership teams to allocate workers more effectively. 

Enhanced Efficiency through Contractor Management Software

Based on the USG and U.S. Chamber of Commerce Commercial Construction Index, over 70% of construction professionals believe that adopting digital tools for managing contractors positively impacts project outcomes, including boosting productivity (78%), refining project schedules (75%), and elevating safety standards (79%). Advanced management tools streamline workflows, improve communication, and facilitate real-time collaboration, enabling companies to complete projects more efficiently, even with a limited workforce. Businesses that rely on contractors and leverage contractor management software experience a tangible reduction in project duration. However, according to AGC of America, only 29% of companies report investing in technology to supplement worker duties.

Predictive Analytics for Workforce Planning

Companies using predictive analytics for workforce planning are more likely to outperform their peers in profitability, showcasing the importance of strategic workforce development. By analyzing historical data and industry trends, predictive analytics helps construction companies anticipate future labor needs, allowing for proactive recruitment and training initiatives.

Augmented Reality (AR) and Virtual Reality (VR) in Training

A study by PwC indicates that employees trained with VR and AR tools are four times more focused than their counterparts trained through conventional methods, underscoring the significance of technology in ongoing workforce development.

Investing in AR and VR technologies for contractor training accelerates the learning curve and ensures that less-experienced workers can contribute effectively to projects, mitigating the impact of the skilled labor shortage.

Robotics for Labor-Intensive Tasks

The World Economic Forum estimates that by 2025, robots will carry out more than 50% of routine construction tasks, reducing the dependency on human labor and addressing challenges in contractor management.

Integrating robotics into construction processes addresses the shortage of skilled workers and enhances precision and safety on job sites.

In conclusion, the statistics speak volumes about the transformative power of technology in tackling the contractor workforce shortage. Companies can secure the right workforce by using contractor management tools like Appruv to maintain a pre-approved contractor database for swift project starts during labor shortages. This ensures access to verified contractors, boosting flexibility and alleviating the impact of labor scarcity on project timelines and quality.

By embracing Appruv, companies not only weather the current storm but also lay the foundation for a more efficient, resilient, and tech-driven future in construction. 

Contact Appruv today to learn more.

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