The fast-paced design and construction industry continues to make impressive progress across the country and around most of the world. While many worry about the inevitable slow down / recession a more immediate problem confronts both Owners and Builders.
Capacity constraints evidenced by shortages of materials, equipment and skilled labor are overshadowing all parts of the design and construction industry. With historically low unemployment rates and meek replacement rates for the loss of skilled workers, a crunch is coming where demand meets supply.
A historical perspective alerts one to the cyclical nature of the industry but does not provide a reliable tool to timely forecast the rapid swings of the industry.
Boom times tend to pull new work into the marketplace as demand for all types of construction encourages owners and developers to move along with the momentum of the economy. Contractors are encouraged to undertake new work and expect to meet their needs from an expanding workforce. Strong demand for labor skills pushes labor costs higher and at the same time turnover in workers prevents the efficiency that team continuity provides. As more movement occurs pursuing rising wages, the introduction of new entries into the labor pool adds drag to the learning curve for teams engaging in the more complex and time/schedule critical works. It is at the same time a vibrant but vicious cycle and can lead to unexpected losses in productivity.
How does an owner or contractor stay ahead of the curve? One of the most telling signals comes from a comparison of planned and actual cash flow for the work. The owner can effectively monitor progress against this curve and by showing planned and actual percent completion on the same chart have a predictive tool to provide early warning of developing problems. The reporting information that flows through the Contractor or Construction Manager is more detailed and should allow the contractor to monitor cash flow, reported percent complete and manpower curves both planned and actual on a weekly basis. Manpower monitoring is a very effective early indicator of project health. Looking at the BIG PICTURE of the overall chart of planned and actual progress, allows for early recognition of pending issues and is a very useful display of important and monitoring/forecasting metrics.
While it is true that contractor performance is the primary responsibility of the contractor all execution problems do eventually come home to the owner and frustrate the best laid risk shifting contracting plans. Additional information on Project and Construction Management topics can be found on our website.
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