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The impact of COVID-19 has been felt in nearly every industry and arena across the country, with the exception of construction—or so that is the general perception. Perceptions are often wrong though, and this one is no different. The truth is that the construction industry has been hit just as hard, if not harder, than every other industry. 

As the COVID-19 pandemic struck in the spring of 2020, construction projects plowed forward full steam ahead. Roadwork seemed to increase and developers continued to systematically acquire property and initiate large-scale projects. Perhaps it was these observations that led many to the conclusion that construction was pandemic-proof as the rest of society attempted to cobble together something that vaguely resembled a normal business year. But the construction industry has endured many challenges over the last 18 months, and unfortunately, the challenges do not appear to be evaporating anytime soon.

The industry has been primarily affected in the areas of scheduling, manpower and permitting, which has ultimately affected pricing. The entire way jobs are scheduled has been turned upside down. The supply chain issues that many have experienced for everyday household items have hit the construction industry as well. 

In normal times, if concrete was needed, a call could be made and concrete was on the jobsite the next day. Now, concrete must be ordered at least two weeks in advance. The backlog for materials and supplies has been even worse. In pre-pandemic times, interior materials were not ordered for a job until a general contractor had been on-site for at least three or four months, but now must be ordered before a job is even started. Even paint has been difficult to come by. Contractors may have to take whatever material they can get now because the options simply are not available.

Manpower and escalating labor rates have been an additional challenge. Construction projects have continued, but the supply of workers has dwindled. Whether it’s due to people receiving unemployment benefits or concerns due to COVID-19, contractors are continually trying to find workers. Indeed, many industries have experienced a shortened supply of workers due to the government stimulus packages and generous unemployment benefits that have been made available. There is also likely some segment of the construction worker supply that simply has concerns about working on a job site due to health implications. Construction is a different employment space in that employees cannot retreat to an office or cubicle and distance from co-workers. Rather, construction requires collaborative teamwork that often does not always allow for social distancing. 

With a smaller pool of workers, wage rates have inevitably escalated. Construction companies are so desperate for workers that management personnel poach workers from other job sites by promising higher wages. In that scenario, contractors either have to match what the competitor is offering or cut the worker loose. Fortunately for the established general contractors, they are typically able to hold on to core, senior workers, though less seasoned team members are always susceptible to being lost to more lucrative positions with other construction companies.

Finally, permitting has created a significant challenge for construction companies, which in turn has affected pricing. State and local government offices have been some of the slowest businesses to return to pre-pandemic operating capacity. Permitting is a necessary, albeit sometimes frustrating, hurdle that has to be cleared before a construction project gets off the ground. Many permitting offices sent workers home in the spring of 2020 to work remotely and many have yet to return to the office. While the country has quickly learned how to work from home through Zoom and similar applications, permitting is an arena that has yet to successfully navigate the transition. 

It is not uncommon for projects where permit applications that were submitted in spring 2020 are still waiting for approval a year and a half later. There are projects around metro Atlanta where metal beams and foundation materials are literally sitting on the land and there is nothing else contractors can do until the necessary permits are approved. 

The delay in permitting has also had a significant impact on pricing. For permits that were submitted in the spring of 2020, pricing for those projects had already been finalized, as had loan applications. Eighteen months later though, the pricing of materials has increased and the loan that was already applied for by the client is now not going to be sufficient to cover the cost of the job. Pricing has probably been the biggest challenge for the construction industry because clients usually prefer certainty, particularly when it relates to a budget. When a contractor agrees to one budget that is sufficient at the outset of a project, and then has to back track and tell the client it has increased six months later, it is not a conversation that is generally well received.

Despite the challenges in scheduling, manpower and permitting, the commercial construction industry is trudging forward. Construction companies are figuring out how to maneuver through these uncertain times and making the best of what has been a truly unique situation. 

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