Reshaping the Construction Industry

Brendan Bechtel, new Chief Executive of Bechtel, one of the largest global construction companies in the world, recently made a speech to the Construction Industry Institute conference in National Harbor, Maryland in which he said, “Our house is on fire.” This was according to an editorial in Engineering News Record.  Bechtel continued, “If we don’t address (the various problems), we may cease to exist as an industry…”Sounds dire to me, how about you? What he was talking about was the current state of megaprojects (budgets of US $1billion and above) and the claims that “98% of all of those projects experience cost overruns or delays..the average cost increase is 80% and the average schedule slippage is 20 months.”   

The folks over at the website “BuiltWorlds” point out that well before the Great Recession began – causing various shifts across the construction industry – there was already a lack of craft professionals with various skills.Among others, the authors spoke to Brian Turmail, senior executive director at the Associated General Contractors of America:For years, the nation had been undergoing a cultural shift, he explains, where society had come to discourage children from blue-collar careers. "More and more parents, high schools, even the government, began placing increasing emphasis on high school students to pursue college educations rather than vocational and technical educations in fields like construction,” says Turmail.  

Job openings rise in July; Dodge sees more projects ahead; surveys vary on cost trendsEditor’s note:  Construction Citizen is proud to partner with AGC Americato bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.There were 214,000 construction industryjob openings, seasonally adjusted, at the end of July, BLS reported on Wednesday in its monthly Job Openings and Labor Turnover Survey (JOLTS). Openings amounted to 3.1% of combined employment plus openings. Both figures were the highest for July since 2006. In contrast, the 334,000 hires in July, seasonally adjusted, and the hiring rate (5.0% of monthly employment) were in line with monthly levels over the past eight years. Together, the near-record openings and trendless hiring pattern are consistent with the results of a survey AGC released on August 31 in which 69% of the 1,459 responding contractors reported difficulty filling craft positions. The number and rate of layoffs and discharges in August, seasonally adjusted, are near the lowest levels in the 16-year history of the JOLTS data, suggesting contractors are trying to hold onto workers, a possible indication that they have a backlog of projects to complete.  

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