Risk

What Is the No. 1 Risk for Construction, Heading Into 2021?

Industry professionals share their thoughts on the challenges and risks facing the construction industry heading into 2021.
By Rachel E. Pelovitz
November 7, 2020
Topics
Risk

Rich Henry
President, Northern Pacific Region
McCarthy Building Companies 
San Francisco, California

The uncertainty brought about by COVID-19 remains a looming risk for the construction industry. Because our business requires a large amount of planning and work done in advance, we’ve been able to continue jobs that were already in progress, as well as projects that were in the design phase when the pandemic started.

However, the last eight months have seen a significant number of delayed or canceled projects, and the full impact remains unknown. Clients are hesitant to pull the trigger on new projects, and the industry can’t predict when new work will resume. The ripple effects of the uncertainty make
it challenging to forecast materials procurement and workforce management.

On an individual level, our crew members are dealing with juggling regular full-time work schedules, accommodating distance learning for kids and the dynamics of leaving home for essential work without risking the health of vulnerable housemates.

Forrest McNabb
President – National
BIG-D Construction
Ogden, Utah

In addition to the pandemic, 2020 has included earthquakes, record winds (including a derecho in Iowa), hurricanes, wildfires, chaos across the country and manpower challenges that our teams have dealt with—not to mention their own personal challenges from time to time. To top this off, this year’s election season has created a divide between the citizens of this country greater than we have seen in history.

I am amazed at how our people continue to march forward every day for the good of our organizations, customers, associates and their families. The health and wellbeing of each person in our industry is the biggest risk we face as we prepare to leave the unforgettable 2020 behind.

As we head into 2021, we need to continue to focus on being more empathetic and understanding. Our critical industry has allowed us to display the resiliency of our people and the great work they bring to our organizations. Our job is to make sure that our greatest asset is our top priority.

Eric Pyle
Building Division Manager
Bell & Associates
Brentwood, Tennessee

The impact of COVID-19 on our economy will be the biggest challenge for the construction industry in 2021 and beyond. Some forecasts show that Q1 of 2021 will be slow for new construction, which presents a risk for the industry.

To mitigate this risk, contractors will need to prepare for the potential of subcontractor default due to aggressive bidding, overcommitment to projects and the lack of qualified workforces. This will increase the demands on management staff, including construction managers and owners, to address issues early.

Supply chain, including availability of materials and the global manufacturing market, will continue to be affected. It is likely that designers will be forced to source domestic products to keep projects on schedule.

Despite these challenges, I believe the amount of construction backlog across the country will mitigate the overall impact of the pandemic, and the industry will continue to thrive.

by Rachel E. Pelovitz

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