Tagged

Challenges will persist throughout 2022, but there are also opportunities

 

By Doug Lyall, HUB International

 

When it comes to the construction industry, the theme of the year is “shortages.” Whether it’s a lack of materials or labour, projects can’t complete without personnel or supplies, leaving construction firms at risk of failure.

There will be substantial risk management and insurance challenges in 2022, as well as opportunities. However, the companies that exhibit resilience will be best positioned to weather the storm. Attracting new workers and finding alternate suppliers is just the beginning.

Here’s what to expect in construction in 2022:

 

1. Supply chain issues continue unabated

Unfortunately, supply chain disruptions that began back in early 2020 will continue in 2022.

Commodity prices continue to climb and drop. Steel prices are up 200 per cent, with futures that hovered around US$500 back in 2020, now topping US$1,800.1

Materials shortages interrupt everything from timing to budgets on a construction project, leaving contractors to scramble to extend expiring insurance policies at a time when they don’t have extra money to spend. In the end, resilience is the name of the game. The most important steps may include creating a reserve of supplies and cultivating relationships with suppliers and backup suppliers – especially local ones.

 

2. Green materials grow in popularity

With increased focus on green construction in recent years, builders and contractors will finally see an increased interest in alternative materials in 2022. With recent advancements, these supplies have become a more attractive option to builders.

On the other hand, these materials are costly and imperfect, and they aren’t a perfect workaround to supply chain issues. Contractors and other construction professionals will need to check the insurance implications before committing to going green.

 

3. Advancements within construction help combat the labour shortage

Despite the construction boom across Canada, the labour shortage continues to challenge the industry. With the average Canadian construction worker reaching 42 years old,2 and young people avoiding the industry, construction firms have their work cut out for them. Nearly 310,000 construction workers will be needed in the coming years, leaving the industry short 81,000 workers by 2030.3

Attempts to recruit younger workers – such as paid apprenticeship programs or vocational skills programs – have been largely unsuccessful. Yet trends within construction may offer the biggest hope: Younger workers are attracted to jobs in technology. Whether it’s an opportunity to work with drones or robotics, or a chance to do construction work in a protected environment, as in modular construction, younger workers are becoming interested.

Even more encouraging, younger workers with tech skills may help drive entry-level wages higher4 and firms that offer voluntary employee benefits are also attracting new employees.

 

4. Cybercrime has become ubiquitous

One study showed that 75 per cent of construction-related firms had experienced a cyber incident in the previous 12 months.5 With so many organizations facing cyber challenges, cyber insurance is no longer optional in 2022.

Technology makes construction businesses vulnerable to ransomware, social engineering and other cyberattacks. However, the data suggests that technology can actually improve the industry’s productivity as much as 60 per cent, delivering as much as $1.6 trillion annually in incremental value.6

For construction firms committed to technological innovation, it’s not a good option to forego cyber coverage. Attacks will only increase and those lacking coverage could end up suffering devastating losses. Yet with underwriters following more stringent guidelines than ever before, cyber insurance premiums will increase 20 per cent or more in 2022. Firms would do well to document their risk management processes to make themselves a more reliable risk for the underwriters.

 

Stepping into the future

The difference between success and failure? Resilience. With much uncertainty ahead in 2022, firms that can navigate the supply chain issues, labour shortage and financial uncertainties will achieve the greatest success.

The best way to counter the ongoing risks and boost resiliency is to work with a broker who is an expert in the construction industry, its risks and its players. An experienced broker can help secure appropriate insurance coverage at a competitive cost – and help companies face the next challenge from the strongest possible position. 

Doug Lyall is chief sales officer of global insurance brokerage Hub International in Alberta. With a long background in the construction industry coupled with growing up in Canadian prairie farm and ranch country, Lyall understands the business needs of locally based businesses in a globally impacted economy. He has spent his career developing insurance plans and products focused on providing industry-leading options to both segments of business and brings that depth of experience to his leadership role. 

 

 

Sign Up

To receive our e-newsletter in your inbox, please provide your e-mail below.

About Us

Piling Canada is the premier national voice for the Canadian deep foundation construction industry. Each issue is dedicated to providing readers with current and informative editorial, including project updates, company profiles, technological advancements, safety news, environmental information, HR advice, pertinent legal issues and more.