Ironworker Management Progressive Action Cooperative Trust

Expanding Job Opportunities for Ironworkers and their Contractors

Just wanted to say that Mark, Michael and Stuart from FMI and Trevor from PWC did an excellent job engaging the classroom in discussion each day, and had a great program format for teaching. The information they brought forward was extremely useful now as I'm sure it will be throughout my career. This was only my 2nd IMPACT course that I have attended, I would like to commend IMPACT on organizing these events for Ironworkers and contractors alike, IMPACT always put on an amazing program, and does a very good job at making these events comfortable and welcoming to attend. I plan to attend more IMPACT events as the information is always very useful and IMPACT does a great job of finding the right instructors for the occasion. I would like to thank everyone at IMPACT for the work they do to set these events up and providing the opportunity to attend these courses.

Regards,

Jacob Wicks
Chief Estimator
JCT Metals Inc.

News

NEWS(1)

Deloitte: Construction cost pressures to continue in 2020

01/08/2020

By: Jenn Goodman

A new report from accounting services firm Deloitte touches on what construction pros already know: It's getting harder to make a profit in commercial building.

According to the 2020 Construction and Engineering Industry Outlook, a number of factors will put extra pressure on U.S. engineering and construction companies’ profitability in 2020. These include increasing project complexity, competition from Asian companies, talent shortages and supply chain constraints. In addition, construction and input costs for key building materials such as steel are rising, largely driven by limited supply and tariff uncertainties.

The report cites the 2019 Turner Building Cost Index, which measures costs in the nonresidential building construction market in the U.S., and noted that it increased to a value of 1177 in 4Q 2019, the highest ever in its 13-year history.

While firm revenues are steadily rising, E&C firms in the U.S. face considerable pressure, the study notes. Among the challenges the industry faces are sustained cost pressures, ongoing labor shortages that affect productivity, and trends toward fixed-bid projects that often demand a level of pricing and operations precision that is difficult to obtain with traditional systems. 

Nevertheless, Deloitte noted several trends for 2020 that could help to improve builders' profitability and reduce margin challenges. These include:

move toward modularization and prefabrication

Modular building has the potential to significantly affect productivity and margins for E&C firms in 2020, the report states. The use of modularization and prefabrication techniques not only can save on labor costs but might also ensure better quality and shorten the project schedule with less labor required on-site. This can avoid rework and help improve safety as well, the report espouses. 

Although these tactics have been around for decades, advanced technologies such as BIM are now enabling better integration of components into offsite construction, according to study author Michelle Meisels, Deloitte’s Engineering & Construction practice leader.

"Prefabricated construction allows you to build in a controlled environment," she said. "With more control and better planning comes the ability to control costs and mitigate any risks of surprises such as inclement weather."

As a result, contractors are now able to develop innovative designs and create superior buildings that shave as much as 30% off the construction schedule and reduce waste, thereby lowering costs, she told Construction Dive.

The launch of U.S. infrastructure upgrade initiatives

The study notes that America's infrastructure is due for approximately $4 trillion in repairs and that the federal government is planning to spend up to $2 trillion over the next 10 years, one of the biggest infrastructure investments in history.

This plan to invest in upgrading infrastructure including roads, bridges, water systems, broadband and the power grid will drive revenue and spur job creation for the E&C industry, although Meisels noted that the impending presidential election and the continuation of trade tariffs could hamper the potential benefits.

The rise of smart project management

Digital technology and real-time data can help project managers make better-informed decisions around scheduling labor and materials and this type of project monitoring is moving beyond documenting cost overruns and construction delays to include more forward-looking insights, according to Deloitte.

These new technologies, the study notes, can eliminate the need for time-intensive work like manual data entry and provide the data required to assess project status and identify trends and areas that should be addressed. In fact, having state-of-the-art cost budgeting and scheduling tools and technologies is becoming a competitive advantage for construction and engineering firms.

See article on constructiondive.com.

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