Healthcare Construction Recovery: Managing Past Uncertainty

Healthcare contractors, facilities managers and others tasked with keeping healthcare renovation projects on schedule and on budget have had their hands full. Yet despite the challenges wrought by inflation, supply chain issues and labor shortages, there are reasons to be hopeful and strategies you can use to thrive through the uncertain year ahead.

Big Picture View

First, the pandemic threw a monkey wrench into the works. Then, through the first half of 2021, the industry endured significant price spikes – on just about everything.

Although the months ahead may not necessarily bring additional cost increases, the experts say we can expect continued volatility, which means extended financial stress across the construction landscape. Finally, there’s the labor scenario, which has seen job openings increasing as new hiring activity has stalled. The constant struggle for manpower has resulted in overworked management and labor pools.

As AGC’s Chief Economist Ken Simonson shared on a STARC hosted webinar last week, a recent survey of the association’s membership reveals construction firms’ expectations for headcount and hiring over the next 12 months is optimistic – but most respondents (75%) also think it will become, or continue to be, harder to hire.

Day-to-Day Reality

For contractors, inflation is affecting current and future contracts. Last year’s 10%-11% inflation has led to project delays and cancellations, as well as the reallocation of teams, according to Tim Brewster, Project Executive at Columbia Construction Company. During last week’s webinar, Tim weighed in with his take on the key challenges contractors and subcontractors are grappling with. He also spelled out his strategies for combatting the current climate, including:

• Setting achievable expectations
• Informing new and existing clients of current inflation updates
• Having open and honest conversations about pricing and schedules
• Not being afraid to have the hard conversations, and
• Embracing innovation

This last point is worth highlighting because, although it may feel like today’s challenges are unprecedented, it’s important to remember the commercial construction industry has faced difficult times before. In each case, those who thrived were the ones who were willing to explore their options and think outside the box.

Finding Solutions

Rising prices, supply chain issues and labor shortages may be big-picture problems, but as STARC’s own Chris MacKenzie, Vice President of Strategic Partnerships, points out: small choices lead to big wins. And one of the key points he made during the webinar was how innovative solutions – particularly those engineered with a safety-first mindset – can go a long way toward bringing price stability and product availability to healthcare renovation projects, while reducing dependency on labor.

Of course, innovative solutions aren’t always product-based. Sometimes it’s a matter of how you access the materials you need. For example, Chris referenced STARC’s fast-growing network of rental installers, for those customers who don't want to budget for the actual purchase of temporary containment.

This small choice, which includes delivery and set-up, saves customers on labor and storage woes – things that make a big difference over the life of a project.

This article provides some quick takeaways from the webinar. To catch the full presentation from Ken, Tim and Chris, click here.