How Oil & Gas Drive Up the Price of Construction

A recent survey from Associated General Contractors of America found that 83% of firms across the country are having trouble keeping/ filling positions related to construction. Dalkita can confirm this trend with first-hand knowledge. The Denver area is in full-boom with projects happening all over the metro area. Some jobs experience delays due to the lack of qualified workers available to complete the job at the sub-contractor level. An article in the Thursday, October 23, 2014 Denver Post does a great job of explaining the impact of the shortage in skilled and unskilled construction workers — both locally and along the front range of the Rocky Mountains. In order to reduce or eliminate costly delays in projects, construction companies have had to raise base wages and offer incentives, signing bonuses, job completion bonuses. These added costs will end up raising the final cost of construction regardless of which firm is selected to do the work.

The Denver Post attributes the local shortage of workers to steep competition from the oil & gas development in the United States. The boom in Natural Gas production for the U.S. (we are currently the number one producer of natural gas in the world) has depleted the already small pool of available labor for construction projects by attracting some of the best and brightest workers to the oils and gas fields across the Western United States. The worker shortage affects all levels of the construction industry – from accounting to the engineers and project managers  and from the specialized trades to the everyday general labor.

Check out the articles here:

http://www.agc.org/cs/news_media/press_room/press_release?pressrelease.id=1650

http://www.eia.gov/todayinenergy/detail.cfm?id=13251#

http://www.denverpost.com/News/ci_26779405/Colorado-construction-firms-up-the-wage-ante-to-compete-for-workers

http://www.bizjournals.com/denver/blog/real_deals/2014/07/denver-construction-costs-report-warns-booming.html?page=all

 

Leave a Comment

*