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Industry Updates

6 Areas Contractors Should Focus on for A Future Recovery

Strong communications with employees, whether they are working from home or at a job site, is always important, but even more so during the pandemic. (iStock/nensuria)

In the fall of 2020, there is still uncertainty in the construction industry as construction employment remains lower in most parts of the country compared to just before the COVID-19 pandemic started. As firms work their way through their backlog of projects, they have taken time to assess how the pandemic affected their business. Recognizing that innovation often blooms out of disruption, many firms are using these assessments to guide medium- and long-term planning to re-envision and revamp their businesses. 

The focus is on validating what they have done right, taking advantage of new market conditions and improving processes as needed, all aimed at enhancing the bottom line. Centering on six specific areas will guide contractors toward best practices for future success.  

Operations, Profitability and Revenue

Contractors concerned their backlog of projects may be shrinking need to pay attention to new opportunities created by the pandemic. As employees move back to the office, new interior work is necessary to make those offices compliant to local health and safety guidelines. There is a hub-and-spoke trend starting to emerge in which central metropolitan offices are being supplemented with smaller regional offices, providing safer working conditions by locating offices closer to employees’ homes — thereby minimizing mass transit exposure and reducing the number of employees working in a location.

“Helping employees stay connected and productive is a challenge leaders need to master to protect one of their most important assets.” 

The search for a vaccine and therapeutic cures for COVID-19 is driving laboratory and office needs in the biotechnology area. The shift from brick-and-mortar retail to online shopping is driving demand for distribution centers and warehouses. Strip mall owners are transitioning space from retail to next-day delivery centers, so online retailers can keep stock closer to where their customers live. 

On the cost side, both time and material costs for construction projects have dropped for some sectors of the construction industry. Road construction projects accelerated because fewer vehicles were on the road. Crews finished K-12 or college projects faster because campuses were emptier. Shorter project times lead to lower costs for contractors.

Client Relationships

Strategic growth opportunities for contractors are closely aligned with client relationships. Pre-pandemic, these relationships were largely based on in-person business development opportunities. Contractors have had to pivot to online platforms to maintain relationships with existing clients. Customer relationship management software that manages client relationships becomes more critical for contractors to stay visible to their clients and understand their needs.

Human Capital

Strong communications with employees, whether they are working from home or at a job site, is always important, but even more so during the pandemic. With normal working arrangements disrupted by both remote working and social distancing requirements, leaders should recognize that transparent, consistent and relevant communications, flexibility in schedules and enhanced health benefits, including mental health, are important for employees across the spectrum of age and responsibility at a company. Helping employees stay connected and productive is a challenge leaders need to master to protect one of their most important assets. 

Financial Resilience

Cash is always king, but early in the pandemic it often was the difference between keeping the doors open and closing down. While federal programs such as the Coronavirus Aid, Relief, and Economic Security Act and the funding available through the Paycheck Protection Program helped many businesses, contractors need consistent and regular monitoring of cash flow as the uncertain nature of the economy continues.

Contractors need to closely watch key operational data to better understand the financial impact of projected demands on both labor and supplies.  Businesses need to adjust their tax strategies to maximize cash in the short term. 


The disruption caused by shifting workplaces from office to home has also increased the number of cybersecurity challenges for businesses. As part of their ongoing communications, leaders need to remind employees throughout the organization about good cyber practices, like double-checking the authenticity of both internal and external e-mails.

In addition, organizations need to add better data dashboards and expand dashboard visibility to leaders at all levels. Clear visibility to essential data provides insight and transparency and supports managing a fluid virtual environment. This is especially important considering compressed scheduling times for construction projects will require the ability to quickly adjust timeframes and manage productivity for projects.

Stabilization of Subcontractors and Suppliers

Contractors need to understand how the pandemic affected their supply chain. Reliance on foreign manufacturers of steel and other critical materials will compel some contractors to look for alternatives, such as locally sourced mass timber. While alternatives to steel may be more expensive, there are positive trade-offs. The availability of prefabricated, sustainable components will reduce the amount of time workers spend at a site, reduce the time cost of a project and provide long-term benefits to the environment.

Contractors need to move toward diversification of suppliers and subcontractors to reduce the possible disruption when something like a pandemic or other economic disruption happens in the future. Monitoring financial and workforce stability of supply chain partners is a risk mitigation strategy that should be deployed.  Contractors with a developed and focused construction recovery plan will be building resiliency into their organizations, making them better able to succeed regardless of future economic disruptions. 

Laura Cataldo, a senior manager in Baker Tilly’s real estate practice works with real estate and construction firms of all sizes to evaluate business practices and assist with management challenges. She has worked in the industry for almost 25 years, helping management teams improve profitability and succeed in the changing marketplace.


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