Key Trends in the California Construction Industry

It’s a basic human instinct to compare how one person or business differs from another. While this can sometimes be competitive in nature, it can also be a useful tool in understanding where opportunities for growth and change exist. It’s no secret that the cyclical nature of construction and the increasing shortage of labor are concerns for many. However, it’s important to understand what other issues and trends are presenting themselves for the construction industry. Earlier this year, the Associated General Contractors of America (AGC) published the 2017 Construction Outlook Survey – California Results. This report goes into detail about the challenges being faced by construction companies in the state, emerging trends and even attitudes about the future. To help clients, prospects and others, JLK Rosenberger has provided a summary of the results below.

Key Survey Findings

• Biggest Concerns – Aside from growth in federal, state and local regulations, labor and labor related issues, appear to be the prime concern for survey participants. 41% of respondents indicated that worker shortage and worker quality are their biggest concerns followed by increased competition, rising direct labor costs and rising subcontractor costs. Only 12% of respondents indicated that not enough private sector work was a key area of concern for the business. Other issues identified include external process inefficiencies and lack of infrastructure investments.
• Financial Conditions – The ease of capital access is important for any large construction project. According to the survey results, very few companies are experiencing capital access problems. When asked, 65% of survey respondents indicated there has been no change in bank lending to their company or customers. Only 4% of respondents indicated that their company has had a harder time getting loans or access to capital. However, increasing healthcare costs was identified as a top concern with an overwhelming 86% of respondents reporting an increase in cost over the prior year.
• Employment Trends – Access to labor has been a concern for many construction companies, and it appears that this trend will continue. When asked about changes in employment levels, 80% of respondents indicated they would be hiring additional employees, 5% of respondents will make no change and 16% of respondents will decrease their number of employees. When asked about the ability to fill skilled positions, 42% of respondents indicated they are having a hard time filling salaried and skilled positions while 14% of respondents indicated some trouble filling skilled positions. 20% of respondents indicated they are having no trouble meeting hiring needs. When asked about future demands for labor, 77% of respondents indicated they expect to continue to have problems filling positions.
• Information Technology (IT) – Companies appear to be continuing IT integration into various aspects of the business. According to the survey, 45% of respondents indicated that there will be an increase in the amount spent on IT in 2017. Companies are also expanding how they use technology to collaborate with partners. Beyond traditional email and file sharing, 47% of respondents indicated they use online project collaboration software, while 43% use Building Information Modeling (BIM) applications. Only 4% of respondents indicated they don’t use technology as part of their collaboration process. Surveyed companies also indicated they will be investing in document management, estimating, accounting and client relationship management software.
• Mobile Technology – The use of mobile technology to drive efficiencies will continue throughout 2017. When asked how the company plans to use mobile software, the top four priorities included making it easier to complete and submit daily reports, sharing of drawings, photos and documents, accessing customer and job information from the field and accessing job cost and project reports from the field. In terms of IT security, 58% of respondents have a mobile security plan in place, and more than half of participating companies provide mobile devices to their staff versus allowing staff-supplied devices. Learn more about how construction companies are using mobile technology in a recent blog post – Importance of Mobile Tech for Construction Companies.

Contact Us

The construction market in California is strong and will continue to be so throughout 2017 and beyond. However, labor challenges, compliance with changing regulations and IT integration appear to be a continued priority. If you have questions about the survey findings or need assistance with a tax, audit or other financial issue, JLK Rosenberger can help. For additional information please call us at 949-860-9902, or click here to contact us. We look forward to speaking with you soon.