ENR magazine’s annual ranking of the top 600 specialty contractors is always a worthwhile read. The “who’s up, who’s down” cataloguing of competitors is reliably intriguing, but look past the gossip-inducing listings and focus on the commentary. It’s the observations and interpretations of company leaders that are most revealing about the future of our industry.

Across the four major trends that stood out to us in 2024’s report, we observed a common factor – the human factor. It’s easy to get caught up in talk about changing demand, supply chain troubles, production challenges, and changing technology (guilty as charged!). But think a little harder and you’ll realize that behind each of these dynamics lies some very human influences.

Trend 1: The politics of shifting demand

“Business is still booming” is ENR’s reassuring opening line. The writers highlight our industry’s “third consecutive year of double-digit revenue growth.” While the headline figures are positive, they mask shifts in demand that bring challenges and opportunities. Tracking these trends “requires our attention on an almost daily basis,” says Bob Dunn, the CEO of National Steel City, a specialist construction firm with an 85-year history.

Lithko Contracting, a major contractor with revenues in excess of $1.7 billion, noted that “mixed-use and warehouse projects have decreased by as much as 60%, with rental rates dropping as interest rates have increased.” Rob Strobel, the firm’s CEO, says he’s positioning the business to take advantage of federal funding for major infrastructure, data centers, microchip manufacturing and alternative energy projects.

The human factor

Market forces are complex, but $400 billion in funding made available through the Inflation Reduction Act was a political decision by the Biden administration. Much criticized by the Trump-Vance campaign, following his re-election Trump has promised to cancel all unspent funds. His room for maneuver may be limited by legal protections and the fact that most grants will have been made before Inauguration Day on January 5.

If change is baked-in, specialty contractors will need to acquire or develop different capabilities if they’re to adapt to changes in demand and requirements. Companies will need to hire or train new skills and integrate latest technologies as they coordinate projects that are more complex and less familiar.

Trend 2: Managing costs and the supply chain

Our industry may be well past the pandemic (a human factor if ever there was one!), but many firms have retained measures introduced during that period due to ongoing inflation and supply chain challenges. 

Paul Wiederhold, operations manager at SPC Mechanical, a HVAC and plumbing specialist, says he’s come to “expect the unexpected” with supply chains. David Fultz, president of TDIndustries, a Dallas-based construction firm with a strong reputation for its workplace culture, explains that “aggressive project schedules in high-demand markets have put a greater strain on supply chain partners.”

The human factor

Process efficiency and cross-industry coordination are vital in cost and supply chain management. This challenge will only increase as the market drives more complex construction requirements. Matthew Turk, COO of Intren, a firm specializing in energy industry infrastructure, believes now is the time to enable greater flexibility. “It is imperative that as a specialty contractor we are nimble and able to shift with the rapid increase of technology adoption.”

Primoris Services, an engineering and construction firm that features in the Fortune 1000, believes that harnessing its labor resources has helped it to manage any potential supply chain delays. President and CEO Tom McCormick says that by re-sequencing projects they’ve been able to mitigate many disruptions. He added that the firm’s philosophy is to “invest in our people… and show our commitment by investing in workforce training, skill building and apprenticeship programs.”

Trend 3: Production bottlenecks

Specialty contractors frequently operate at the tail-end of the project chain where risks and deadlines accumulate. Increasing complexity in many construction projects will likely exacerbate this issue.

“We need to keep projects moving at a pace that does not restrain the flow of progress. Keeping approvals and documentation up with the pace of some of the projects has been a challenge,” says Ben Johnston, board chairman of Pittsburg Tank & Tower Group, an employee-owned contractor with more than a century of experience.

The human factor

Employee development is part of the solution. Pittsburg Tank & Tower Group has put resources into lunch and learns, collaboration teams, and lessons learned logs. Other firms are looking to technology. Flagger Force, a specialist in road project and traffic control, has invested in communications and microlearning apps to improve knowledge and internal collaboration.

EVOLVE is helping its customers to overcome production bottlenecks by adding data analytics that make it easier to visualize lead times and causes of delay in electrical and mechanical projects. Our Insights tool, available as part of EVOLVE Shop, improves coordination both internally and with partners.

Trend 4: Recruitment and retention

Labor shortages, particularly in skilled labor, continue to be a drag on our industry. The situation has improved (64 percent of firms reported shortages this year, down from 73 percent two years ago) but labor costs are high. “It costs money to attract top-tier talent and to maintain your key field staff,” says Michael Dominici, executive vice president of the Circle Group, an interiors specialist focused on the Southeastern United States.

According to ENR, Top 600 contractors agree that agile operations, helping employees to adapt, and highlighting high-tech roles to the next generation are all key to resolving staffing issues.

The human factor

“Embracing technology and effectively leveraging it to manage workloads will be imperative in gaining a competitive edge in the industry,” says Joseph Lansdell, president of Poynter, a sheet metal specialist based in Indiana. Labor inflation has been the biggest challenge, adds Johnston. “New technology in equipment and software are tools to help offset the increases.”

Many firms are using EVOLVE software to build more flexible, efficient and resilient organizations. Some of this is operational. For example, automated modeling and detailing saves thousands of hours on repetitive tasks. It makes work more rewarding while mitigating against condensed construction schedules and squeezed deadlines. We are also helping to drive strategic change. It’s rewarding for us to enable our customers adapt to shifts in market demand and persistent inflation, labor and supply chain challenges.