| It's a fact that most industries in the past decades | | | | construct a single square foot of office space in the |
| have been suffering from the effects of inflation and | | | | prime areas of United States. |
| never-ending rise of production costs. The | | | | This figure exponentially rises when we're talking |
| construction and engineering industry has not been | | | | about the largest buildings and skyscrapers that are |
| spared the dilemma. Aside from dealing with shortage | | | | either leased or rented out to individual office-space |
| in labor and manpower, material costs are also taking | | | | holders. |
| a toll on the productivity of the construction industry. | | | | Subcontractors decline |
| The worker shortage | | | | Smaller outfits are being more selective because of |
| Fewer employees might translate to more profit for | | | | the relative shortage of manpower in the |
| some industries, but this is not the case for the | | | | construction business. According to David Dempsey, a |
| construction industry. According to James R. Bogonet | | | | senior vice president for Spaulding & Slye |
| of Bogonet Construction Associates Inc., a D.C. firm | | | | Colliers, a development and construction group in the |
| that specializes in building and renovating interior | | | | District: |
| office space: | | | | "Ten years ago, if you put out a bid for masonry |
| "I've had to go out and work weekends to keep a | | | | work, you might get twenty some responses. |
| project on schedule. The construction industry is | | | | Today, you're lucky if you get six." |
| suffering a severe worker shortage that is helping | | | | As we can see here, the construction industry is |
| drive up the cost of development, including wages | | | | experiencing a very tight labor market. In the event |
| and office rental rates." | | | | that such labor conditions exists, every cost rises to |
| The trend is continuous, because as early as year | | | | match the unceasing demand. On the other hand, |
| 2000 more than 240,000 jobs related to the | | | | when labor is plenty, the prices drop because of the |
| construction industry are glossed over for | | | | distributive quality of supply and demand scales. |
| higher-paying jobs. It's a case of double jeopardy- if | | | | According to Andrew Craig, vice president of |
| the firms do not pay enough, they don't get staffed. | | | | construction and design for Staubach Co., an |
| But they lose immense profit when they do pay | | | | international commercial real estate brokerage: |
| higher salaries to construction workers. The problem | | | | "There is so much demand for development in this |
| is cyclical. | | | | area that the problem takes on more urgency. We |
| Prices are going up, up, up... | | | | have to be more strategic, more nimble. They (the |
| According to Engineering News-Record, an industry | | | | clients) want to know, `Why am I paying $50,000 for |
| publication: "National construction costs are up 2.3 | | | | something I paid $30,000 for last year?' You have to |
| percent this year." | | | | help them understand what's happening in the |
| The problem calls for more capital outlay on the part | | | | marketplace." |
| of the clients, because to handle for the backlog due | | | | Craig's analysis is quite dynamic because it highlights a |
| to shortage of workers and even tighter deadlines | | | | basic truth about all industries- that in the end, if the |
| because of being understaffed, it takes $125-$150 to | | | | market is sluggish, everything topples to the ground. |