Early 2020 saw the construction industry hit one of the lowest rates of activities in years. It then came roaring back to see unprecedented growth by 5.2 percent in 2021 according to GlobalData as reported in CONTRACTOR Magazine. Now it's starting to show signs of decline as Dodge Data and Analytics reveals total construction starts fell by 9 percent in August.
"Construction starts have hit a rough patch following the euphoria seen in the early stages of recovery from the pandemic," stated Richard Branch, Chief Economist for Dodge Data & Analytics. "The Delta variant has raised concern that the fledgling economic recovery is stalling out, undermining the already low level of demand for most types of nonresidential buildings. Additionally, significant price increases for construction materials, logistic constraints, and labor shortages are making a challenging situation worse."
Because construction sites are huge and filled with lots of heavy equipment and materials that can't be locked up, thieves view the sites as big opportunities. The problem becomes more serious with the price of materials skyrocketing to new levels.
Besides the high cost of theft and low chances of recovery, here are the other reasons why construction companies need to take extra steps to minimize theft.
Even with the massive increase in construction projects, the industry has been dealing with a new problem. That's the sharp increase in construction material prices. How did this happen?
The pandemic is to blame for both the climbing number of construction projects as well as the sky-high material prices. A large part of it comes from the global supply chain problems that affected every part of the supply chain. Construction Dive's interactive chart of material price changes shows the eruption of material prices.
The National Association of Home Builders says the following are the primary causes of the price increase:
Together, these created an imbalance in supply and demand. As suppliers work to play catchup on orders, builders and traders must submit orders without knowing the delivery date or price. The domino effect continues as Canadian imports into the U.S. market have seen a rise by more than an average of 20 percent for lumber tariffs.
The situation is so severe that the Associated General Contractors of America has never seen the highest monthly and yearly increases like this in its 35 years of tracking the data. This prompted AGC to issue a construction inflation alert. When all is said and done, a project that may have been quoted for $100,000 now costs $160,000. It's forcing some buyers to back out of the deal as they can't afford the 20 percent or higher increase.
Additionally, Ritchie Bros. Asset Solutions' Market Trends Report on Used Equipment and Trucks from June 2021 finds truck tractor prices are up by 23 percent YOY in the U.S. Canada has seen medium earthmoving equipment jump up by 28 percent YOY. Their data goes on to show steep increases for used equipment.
Considering the ballooning equipment costs, it's important to note the price of large equipment theft. The 2016 Equipment Theft Report published by National Equipment Register (NER) and the National Insurance Crime Bureau (NICB) indicates equipment stolen in the U.S. costs between $300 million to $1 billion. Why the wide range? That's because complete statistics do not exist, and they have to provide an estimate based on the available data.
It's important to note that this data does not include losses from business interruptions. These losses include project-delay penalties, short-term rental costs, and unused workforce and management time.
Theft is an issue in construction because criminals know they can walk onto a construction site after-hours with few barriers. The chances of recovery are slim as 75 percent of stolen equipment will not get returned according to the same Equipment Theft Report.
What your company will need to pay for a replacement is most likely going to cost far more than what it paid for its current equipment. Therefore, it's critical to prevent theft in the first place.
A proactive security technology that greatly reduces the risk of theft on construction sites while providing many other benefits is video surveillance. It can help mitigate damage and liability, save on expenses, and identify areas to improve productivity and safety.
Remote video surveillance combines videos analytics and trained monitoring operators. The analytics works with the operators to locate obstacles that could cause safety hazards such as out-of-place tools and materials.
In addition to dealing with potential injuries, construction sites must contend with trespassing, vandalism, and inclement weather. Construction sites located in areas with extreme weather and temperatures may want to add sensors to their video surveillance system.
The monitoring operators watch the property from a safe place away from the construction site. They won't be affected by severe weather, dangerous criminals, or anything else. Anytime a storm hits and causes a problem, the operator can reach out to the construction company's point of contact to report the problem.
Anytime an intruder tries to enter the property, the trained monitoring operator can issue a verbal warning on a speaker. If that doesn't compel the suspect to leave the property, the operator can call the police while staying on top of the intruder's movements.
Video surveillance systems capture everything for later review. It can be stored for a set number of days, more than long enough in case incidents crop up days after they occurred. It'll give you the evidence you need for active investigations and liability claims.
Calculating the return on security investment (ROSI) is challenging but doable. If you're lucky enough, it'll be harder to do the math if your construction company has not had a theft or incident.
It's easier to calculate the ROI of security when you have had $20,000 worth of equipment stolen or destroyed by vandals. Such an incident has more costs that go beyond the price tag of replacing or repairing the equipment. While you can't crunch the numbers on employee and visitor peace of mind, you can determine the costs of workers not being able to work at all or missing a set number of days on the project from not having the equipment.
Furthermore, if the project is delayed, your company may have to pay penalties. If anything gets stolen, especially large equipment, you have to add in the cost of the number of days it takes to get replacements. When you don't have the equipment and supplies you need, you're delaying the project and costing the company more money.
Sometimes the public learns about the theft or incident. When this happens, it could affect the company's reputation and the public's perception of the construction site.
Don't wait for something to happen to take action. Construction companies have a responsibility to keep their employees, contractors, clients, and visitors safe. Other than safety and theft, construction sites have many risks.
The next step in calculating the ROI on construction security is to investigate construction security options. Most security systems are reactive and can only do one thing. For example, an alarm system can't alert anyone until someone has broken in. Its only job is to notify someone when something happens. It can't record the scene or send a warning before anything happens. And if it's a false alarm, it could end up wasting first-responder resources.
Video surveillance, on the other hand, is a proactive security solution that can help catch problems before they happen such as noticing someone approaching the construction site. It saves everything in recordings for later review. The technology helps reduce liability on construction sites. Thermal imaging cameras can help spot any increase in temperature that may indicate a fire.
Search for video surveillance that comes with video analytics and human operators. Analytics removes the tedium and human-prone errors involved with watching the cameras. Humans can make decisions on how to handle a problem and communicate with the involved parties.
You don't always find out about a problem right after it happens. Someone may claim they got hurt on your construction site. You have can have analysts review the video footage to quickly locate the incident to get the needed proof of what actually happened.
As you can see, all of these factors will help ensure you see a fast return on your investment in remote video surveillance. Check out this case study on how remote video surveillance reduces theft and accidents.
Remote video surveillance will help protect your expensive assets and boost worker safety. Considering the rising cost of materials and large equipment, you'll be paying a lot less than that for video surveillance that can do more than avert crime and minimize injuries.