General contractors are responsible for the day-to-day affairs of construction projects. A general contractor must ensure that all construction activities are carried out without a hitch. However, just like any other sector, the construction industry has plenty of challenges that need to be identified and controlled before they stall a project.
One challenge that every contractor must face is how to identify and minimize risks. Construction risks that stall a project may be logistical, financial, or legal. For example, logistical risks are broad and can include transport challenges and labor. Sometimes, contractors will need to determine how labor will be transported to a remote working site.
Another risk worth mentioning is financial risk. When not identified early, this risk can stall the entire project. After all, construction delays and interest rates can reduce the profitability and viability of the project. Financial risks include local taxation imposed on a project and location-specific inflation.
When dealing with large and complex projects, contractors should use modern technology like ALICE to deal with construction challenges and reduce risk. These platforms are used to help contractors make more informed and data-driven decisions through different simulated scenarios and advisement on the best mitigation strategy.
7 construction challenges faced by general contractors
1. Lack of skilled labor
According to a report, more than 400,000 unfulfilled construction positions existed in the year 2023. This problem has forced increases in labor wages, which has also increased construction costs. This has, in turn, caused some parts of America to be more expensive to build in than others.
As a general contractor, failing to obtain skilled labor creates a high risk for failing to complete a project on time, reducing its profitability. One solution that some have opted for is using construction staffing agencies, which are responsible for screening and identifying workers around the country.
2. Keeping up with the construction schedule
A construction schedule is a list of tasks that have been chronologically arranged to ensure a project is completed on time. The main purpose of a construction schedule is to avoid delays by ensuring that available resources are not overstretched.
Construction schedules should be flexible and easy to follow. Adjustments should be easy to make with commitment from all project leaders.
Using modern technology to create a good schedule is advisable since it can easily optimize resources like equipment and labor.
3. Poor communication
One major challenge that affects large construction projects is communication. Think about construction projects with more than six thousand people working on site. In cases such as this, the biggest challenge is coordinating all of these people.
To address this issue, general contractors should use modern communication platforms that make it easier for teams and leaders to share information with one another. The platform should make it easy for people to receive instructions and be held accountable.
4. Unreliable subcontractors
When it comes to construction projects, the person with the most visibility is usually the general contractor—not the subcontractor. Therefore, if subcontractors are unreliable, it affects your public reputation.
This is why it’s important to find reliable subcontractors. Before hiring someone, ask around or check references. That way, you know who to avoid. General contractors can also go a step further and vet subcontractor licenses to ensure they’re genuine and fully qualified.
All subcontractors should have general liability insurance coverage to protect the project from lawsuits.
5. Cash flow management
Cash flow management is the process of ensuring that your finances are well managed. Generally, the number of inflows to your business should be more than its outflows. If cash outflows exceed the inflows, you risk operating in the negative.
General contractors can deal with this challenge by ensuring they only buy materials on a need-be basis. Also, factors like inflation should be considered during costing, as an increase in costs can result in budget constraints.
6. Document storage and management
A lot of documents are involved when dealing with large construction projects. The most common documents include construction agreements between the contractor and subcontractors and the scope of work. Other documents are cost estimates, blueprints, drawings, and regulatory approvals.
The larger the project, the larger the volume of documents involved.
General contractors must therefore come up with a solution to manage these documents and ensure retrieval is quick and painless. One solution adopted by many is using a document management platform that stores data using the cloud. That way, all documents are easily accessible and well-preserved.
7. Workplace safety
A common challenge most contractors face is ensuring that their working environment is safe. This is especially the case when working on dangerous projects like bridge or tunnel construction. Failure to create a safe working environment can result in lawsuits, which costs project owners a substantial amount of money.
One way to create a safe working environment is to develop safety measures. For example, identifying the right gear needed and providing helmets and gloves to all workers. General contractors should also enroll their workers in safety programs to ensure they know what is required to minimize construction-related injuries.
General contractors are crucial to construction projects
General contractors are the people who hold entire projects together. Without their services, it can be impossible for project owners to successfully implement their vision. To ensure that construction challenges are sufficiently dealt with, contractors can adopt technology and use it to their advantage.