Retirement plan sponsors are the first, and most important, line of defense in providing employees with well-managed retirement savings plans.
In 2020, we experienced a year of unprecedented disruptions—a global pandemic, country-wide lockdown, massive loss of employment, economic downturn, and an uncertain future outlook all combined to create unique challenges for individuals and businesses across all industries.
The construction industry is no exception. Despite the broad designation of construction companies as “essential businesses” that largely allowed them to keep operating throughout 2020, the industry has had to adjust to workforce and supply chain disruptions caused by the pandemic, shifts in resources, incorporating remote technology, and a steep drop in non-residential starts this year. In this blog post, we’ll discuss the impact of the pandemic on the construction industry in 2020, and take a look at what’s on the horizon for 2021.
Stepping Up Safety
By nature, managing and working on a construction site can be risky business. Ensuring your construction worksites are safe is critical to the health of your employees, your reputation, and your bottom line. When you throw in the complicating factor of mitigating the spread of a virus during a global pandemic, safety becomes an even more critical element of keeping your operation running smoothly.
Workplace adjustments to COVID-19 on construction sites are further complicated by the fact that you often need teams of people working and coordinating closely on the jobsite. Separating employees as much as possible, forming smaller work crews, staggering shifts, and ensuring that everyone is wearing proper personal protective equipment (PPE) are all precautions that construction industry employers should be taking.
While the vaccine is currently rolling out across the country, safety is going to be a top concern for the construction industry in 2021.
Related Reading: 3 Ways to Increase Safety on Your Construction Site
Supply Chain Diversification
With many businesses suspending operations during the early months of the pandemic, and global supply chain disruptions affecting the availability of building materials this year, construction companies and contractors have had to scramble to make adjustments, with many ultimately paying higher prices for materials.
Unfortunately, this trend shows no sign of improving in the near term. This means that many companies will need to reevaluate long-term business relationships with vendors. Some may need to look into forming new partnerships, which means taking on a certain amount of risk. Adjusting to global supply chain disruptions will require robust coordination between suppliers, subcontractors, general contractors, and owners to make timely and well-informed decisions.
According to LevelSet, “New contracts will likely put more emphasis on escalation clauses to cover unforeseen cost increases, and current contracts may need to be similarly revised. But it’s also an opportunity for nimble suppliers and contractors to move into areas and clientele that might have previously been difficult to access.”
Steep Decline in Non-Residential Starts
Non-residential starts fell dramatically in 2020. According to a mid-August report from Dodge Data and Analytics:
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Total construction starts fell 7% in July to a seasonally adjusted annual rate of $631.6 billion.
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This decline was due to a significant pullback in the nonbuilding segment, which fell 31% from June to July.
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In August, starts were down 15% from the same period in 2019. Nonresidential starts fell 25%, nonbuilding starts dropped 20%, and residential starts slipped 4%.
The downturn in nonresidential starts is attributed to the air of uncertainty that 2020 ushered in, which has made many investors hesitant to start large and expensive projects such as office buildings and hotels.
Fortunately, the decline in nonresidential starts was offset by residential starts, which were up 22.6% in the same time period, likely due to historically low interest rates and stay-at-home restrictions prompting many renters to buy homes with more space.
Navigating a Hard Insurance Market
In 2020, we saw the insurance market shift out of the longest soft market in recent history and move into a hard market. A hard insurance market is typically characterized by higher premiums, more restrictive terms, decreased capacity and enthusiasm for underwriting, and less competition for new business among insurance companies. A hard insurance market is not as favorable to the buyer because coverage can be more difficult to obtain and prices are not as competitive.
Even the most financially stable and well-prepared construction companies will need to make adjustments to adapt to a hardening insurance marketplace. With increasing premiums, more complex and heavily scrutinized underwriting processes, and heavier coverage restrictions on the horizon, here are some tips your organization can follow to help navigate the changing waters:
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Increase your risk management efforts
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Take preventive measures and explore possible policy discounts
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Speak to a reputable, licensed insurance agent
Since your insurance coverage protects the livelihood of your business, the importance of working with the right commercial insurance agent cannot be overstated. When you work with SWBC, you not only gain access to numerous commercial insurance coverage options to fit your business and industry needs, but more importantly, you gain a dedicated advocate who will tailor coverage to fit your needs, budget, and risk tolerance.
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