According to NextAdvisor, inflation hit a 40-year high in December 2021. Everyone and every industry have been touched by the side effects of inflation. This is especially true in construction as the cost of materials soared in recent years to the highest in decades. You also have to factor in the jump in fuel and maintenance costs.
Here are the three biggest ways inflation has impacted the construction industry.
1. Dealing with the Soaring Costs of Materials
The cost of materials climbed to historic levels in 2020 and 2021. Even the Associated General Contractors of America issued a construction inflation alert for the first time in its 35 years of tracking this data.
“The construction industry is currently experiencing an unprecedented mix of steeply rising materials prices, snarled supply chains, and staffing difficulties, combined with slumping demand that is keeping many contractors from passing on their added costs,” writes AGC. “This combination threatens to push some firms out of business and add to the industry’s nearly double-digit unemployment rate.”
The National Association of Home Builders shows the cost of building materials increased 19.2% year over year and climbed 35.6% since 2020. This includes softwood lumber, steel, ready-mix concrete, and gypsum products. WCNC reports there’s a concrete shortage. More specifically, there’s a shortage of specific cement that goes into making concrete. This affects major construction projects.
The substantial increases in the cost of materials have resulted in a much higher total cost of the project. In fact, some home buyers opted out of the contract because the price was no longer in their range.
2. Encountering the Side Effects of Supply Chain Problems
It’s been more than two years since the pandemic’s arrival that sent the supply chain into a tailspin. Unfortunately, things are far from getting back to normal. The supply chain created a backlog for materials as well as drove up the costs as mentioned in the previous item.
The backlog adds a considerable burden on construction companies due to project delays. Many companies had to review their projects and schedules to find ways to avoid losing large sums of money.
3. Rising Construction Site Thefts
Theft is a big problem on jobsites because criminals know they have a good chance of entering a construction site with few barriers after everyone has gone home. With the skyrocketing cost of equipment, any kind of equipment theft will be pricey.
The National Equipment Register (NER) and the National Insurance Crime Bureau (NICB) collaborated on the 2016 Equipment Theft Report. It has found that equipment stolen in the U.S. costs between $300 million to $1 billion. The reason for the large range is because they have to estimate based on the available data as complete statistics don’t exist. Additionally, the report reveals the chances of recovering stolen equipment are unlikely with only 25% of the stolen items being found.
One reason for the growing number of construction thefts is the soaring cost of materials. It started before inflation. The materials haven’t returned to pre-pandemic prices. This is why criminals seek materials from construction sites. They know they can get a lot of money for the stolen goods.
Unfortunately, a lot of criminals have grown more bodacious. At a Colorado Springs construction site, a police officer saw intruders while on patrol. The police officer parked behind the suspect’s truck. What did the suspect do? They didn’t take off. Instead, the driver hit the police vehicle even though it meant causing damage to their own truck.
In broad daylight, intruders spotted the company owner and continued with their criminal plans. They had weapons and made threats. This is an expensive problem as KOAA News reports construction site thefts to cost Colorado construction companies $1.04 million.
Propmodo has found the most common cause of theft on construction sites is due to “security negligence.” This means the construction site doesn’t have sufficient security.
If a construction company must replace stolen equipment or materials, it is very likely the price will be much higher than what they originally paid for it. Therefore, the best way to counteract the effects of inflation is by preventing theft from happening.
How to Stop Construction Site Theft and the High Cost of Replacing Assets
The shortage of supplies drove up the prices. This compels thieves to target construction sites for materials and equipment. There are sophisticated crime rings the have the resources to do big jobs such as stealing heavy equipment.
This leads to the conclusion that the construction industry needs proactive security to protect its workers and retain their assets. The cost of replacing equipment could be difficult and expensive. It may not be something that can be replaced quickly. This puts the construction project at risk for delays and the penalties associated with them.
Moreover, the public may find out about the theft or incident. This could put a hit on the construction company’s reputation. Here are two ways to help deter construction site theft.
Remote Video Surveillance for Construction Sites
One security technology that is proactive in helping reduce the risk of theft on construction sites while providing many other benefits is remote video surveillance. This technology can help deter theft, mitigate damage and liability, prevent the need to replace stolen materials and equipment, and lead to productivity and safety improvements.
Video surveillance with remote monitoring uses a combination of video analytics and trained monitoring operators. Observing the screens for hours is a monotonous task. The power of having analytics is that it does the heavy lifting to help ensure nothing is missed. However, analytics don’t always know what to do or be 100% certain it sees a crime in progress. That’s where humans have the advantage. They make decisions on how to address a potential issue and communicate with the right people.
The human monitoring operators can keep eyes on the construction site from a safe location far away from the construction site. Their lives are never at stake, which allows them to react calmly and appropriately to the situation.
For example, a trespasser approaches the construction site. Video analytics can detect movement and review its many programmed scenarios to determine if it’s a potential problem. Once the system confirms, it notifies the trained monitoring operator. Since the monitoring operator is safe, they often respond by issuing a verbal warning over an on-site speaker.
With more and more brazen thieves making the news, it’s possible they’re not easily deterred by the audio warning. Remote video surveillance has multiple layers of security built in. In those cases, the operator can call police.
The police typically respond faster than they would with a traditional security system knowing the monitoring operator provided video verification. While on the line with dispatch, the operator can follow the suspect’s movements using multiple onsite security cameras.
The security camera system saves all recordings for review at any time. These recordings can provide the needed evidence for active investigations and liability claims.
Access control system
A construction site can add more layers of security by integrating an access control system with remote video surveillance. This simplifies security and lowers the chances of a crime occurring on the jobsite. Here’s an example of how integrated security can track a driver from entry to exit on a construction site.
In this integrated security system, the access control adds a time stamp of the driver’s entry and exit to the video. This can save a lot of time whenever there’s a need to do a video review.
Here are some things in an integrated security system:
- Access control system
- Remote monitoring
- Security cameras
- Two-way speaker
- Analytics
Video surveillance with remote monitoring and an access control system help mitigate risks while maximizing safety and security. Construction companies investing in remote video surveillance often experience a quick return on investment as the technology helps lower liability, improve safety, and thwart crime.
Don’t wait for something to happen before doing something about it. Construction companies have a responsibility to protect their contractors, workers, clients, and visitors.
How Integrated Security Can Yield a Fast ROI
Most typical security systems are reactive and can only do one thing. An alarm system, for example, won’t alert anyone until after someone breaks in. The alarm system can make a noise and call the security company. But if it’s a false alarm and first responders arrive, then that’s a waste of their resources that could be spent on a real alarm.
Remote video monitoring is proactive security because it can identify potential problems before anything happens. This could be spotting a person walking toward the construction site when no one should be on the property. The trained monitoring operator can take action right away. Everything that’s happening is saved as recordings.
If the suspect gets injured while on the construction site, this can end up being an expensive liability claim. Yes, even if the person had insidious plans. Video surveillance helps reduce liability on construction sites.
Many Stealth Monitoring clients see an ROI within months. Have a look at this case study on how remote video surveillance deters theft. Security cameras with monitoring and an access control system will help protect expensive assets and improve safety. Considering the high cost of materials, equipment, and fuel, construction companies could pay much less for security technology that can help avert crime, minimize injuries, and boost operational efficiency.
To learn more about construction security, pick up the construction security and safety best practices guide. This construction security guide discusses industry challenges and offers solutions. If you’d like to know more, feel free to contact us.
