An Experienced Accountant Provides a Forecast for the Construction Industry
Tom LaPlaca is an audit partner at Citrin Cooperman, a brand under which Citrin Cooperman & Company LLP, a licensed independent CPA firm and Citrin Cooperman Advisors LLC, serve clients’ business needs. He has more than 25 years of experience in public accounting and corporate leadership roles. Tom advises clients in various industries including construction, hospitality, real estate, and manufacturing. Here, he answers questions about the future of the construction industry.
Technology has evolved very quickly over the last couple years. Can you tell us about some of the advances in technology, specifically within the construction industry?
Increasing changes in technology are significantly impacting the industry. Many construction companies are forced to move from yesterday’s technology applications to more sophisticated and advanced software systems to stay competitive during challenging times.
In response, software companies are investing billions of dollars to improve their software offerings and stay ahead of rapid technology changes. This software is better at streamlining workflows, automating routine tasks and enabling executives and owners to make more informed decisions based on timely and reliable information. Some companies and federal contractors are using technology to track things like daily employee wellness and vaccination status. These modern technology solutions and the option to work remotely are increasingly important to a new and younger workforce.
Staying on the theme of workforce, what impacts have you seen to the workforce within the construction sector?
There is a huge skilled labor shortage within the industry. Veteran workers are retiring, while the younger generation is typically pursuing higher education. The skilled labor workforce is expecting a 20% retirement rate over the next decade, while projections show a potential 10% growth in demand over the next five years.
Contractors who are able to hire skilled workers are those who invest in technology. They are attracting a younger generation who is not only looking for more sophisticated technology with software integration, automated workflows and cloud solutions, but also tools like building information modeling (BIM), robotics, wearable devices and drones. Unfortunately this also means cost increases, and when it comes to making an investment to attract talent, there is sometimes a lack of perceived value and leadership buy-in.
How have contractors managed through all of these challenges, and what is the path forward?
Despite the pandemic and its subsequent challenges, most contractors experienced a couple of profitable years. The Paycheck Protection Program helped contractors keep their employees, but they’re now left with a market that does not have enough work.
At the same time, the work is extremely competitive, with bidders driving prices down as many of the associated material and labor costs are increasing. This situation is forcing contractors to decide if they should take on work at lower profit margins and hope that nothing further decreases the margins during the job. T0 manage cost overruns, contractors will need to monitor and manage projects on a daily basis to make sure they have the funds to finish them. The construction industry has historically been very resilient — this industry will evolve and come back even stronger.
For more information about Citrin Cooperman’s Philadelphia office, click here. You can reach out to Tom at email@example.com or check out other construction industry insights at www.citrincooperman.comThis post was produced and paid for by Citrin Cooperman