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Overcoming the Biggest Challenges Facing the Maryland Construction - - PDF document
Overcoming the Biggest Challenges Facing the Maryland Construction - - PDF document
Overcoming the Biggest Challenges Facing the Maryland Construction Industry in 2019 Steve Ball, CPA, CVA, CCIFP 1 Steve Ball, CPA, CVA, CCIFP Partner and Director of Gross Mendelsohns Construction Group 2 1 Survey Timeline Year 1 Year
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Who Responded
47% of respondents said their company made less than $10 million in revenue 50% of respondents said their company had less than 50 employees
Outlook Data
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Do you think the CONSTRUCTION INDUSTRY’S outlook is better or worse compared to last year? More Optimistic 2016 2017 2018 2019 54% 78% 70% 63% Do you think YOUR COMPANY’S outlook is better or worse compared to last year? More Optimistic 2016 2017 2018 2019 86% 93% 91% 86%
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What are your top three concerns for your business as we go into 2019? Finding and retaining good employees Cost of materials Timely collection of receivables 1 2 3
Challenges, Solutions and Complications
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Challenge #1 Challenge
Your best employees are leaving your business.
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“The #1 reason employees leave my business is because they can get more money elsewhere.” 2016 2017 2018 2019 30% 34% 34% 34% Q: What advice would you give to a contractor who can’t pay their employees more in salary but doesn’t want to lose employees?
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“More often than not, it is not the money, but having a sense
- f belonging and significance.”
- Construction Business Owner
“Work to create a culture where the employees want to work there and feel valued.”
- Construction Business Owner
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76% of contractors said that salary wasn’t the biggest factor they’d consider when making their
- wn personal decision to leave a
construction business.
Solution
Evaluate and improve your business’s culture.
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What is business culture? How the leadership team acts How employees get treated What perks you offer The overall personality of your team What is business culture? How Gross Mendelsohn Commits to Good Culture Staff advisory board Clear steps for internal growth Community service days Transparency from leadership
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Future Complications
Employees will become more and more scarce. 41% of contractors said they don’t have enough employees to adequately get work done.
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- f contractors think it’ll be
easier to hire construction employees in 2019.
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What is business culture? Jobs take more time/money Employee burnout Incurring higher costs overall Lower quality of work If your business is short on staff, how would you describe the impact
- n your business?
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Challenge #2 Challenge
Material costs are cutting into revenues.
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Growing Contractor Concerns Over Cost of Materials 2016 2017 2018 2019 8% 19% 17% 34% The Construction Intelligence Center (CIC) expects global construction industry expansion to average 3.6% a year between 2018-2022.
Source: Reuters
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Four out of ten contractors didn’t raise their prices in 2018.
Solution
Raise your prices. Review escalation clauses and contracts.
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What is business culture? Explain the situation Evaluate your current service Give notice Have confidence How to Raise Prices Without Losing Business
Future Complications
If you don’t raise your prices, your profits will shrink.
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The demand for work is going to up. Material costs will likely continue to increase with demand.
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A good team needs to be paid well.
Challenge #3
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Challenge
Seasoned veterans are retiring in droves. A third of Maryland construction business owners plan to retire in the next five years.
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Young construction workers entering the industry has decreased by almost a third between 2005 and 2016.
Source: The Wall Street Journal
40% of construction contractors aren’t giving annual performance reviews to their employees.
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Solution
Commit to giving regular feedback to employees. Millennials Born between 1980-1994 Gen Z Born between 1995-2015
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Millennials and Gen Z love feedback. “I give feedback to employees after every project.” 2017 2018 2019 72% 63% 75%
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Commitment to feedback will help contractors retain employees.
Future Complications
If you don’t adapt for a new generation of employees, hiring will become impossible.
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Challenge #4 Challenge
You aren’t using your technology efficiently.
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#1 Technology Concern for Maryland Construction Contractors Having (or not having) automated integrations between software tools like estimating, bid log, scheduling, accounting and service. Using multiple data systems creates data silos, which makes decision making harder.
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2/3 of construction contractors aren’t using technology in a way that makes their business more efficient.
Solution
Work with an IT professional.
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The majority of survey respondents said they had worked with an IT professional to put cyber security measures into place. Only 42% of construction businesses said they had a dedicated IT person on staff.
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IT professional ≠ a tech savvy cousin “Our business’s computer system been hacked, infiltrated by a virus or otherwise compromised during the last year.” 2016 2017 2018 2019 18% 22% 16% 28%
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Future Complications
Without staying on top of technology, your business will fall behind.
Questions?
410.685.5512 sball@gma-cpa.com
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