The New York Building Congress has reported that the inventory of stalled construction sites was down 12 percent over the past year. This is good news for an industry that, as a whole, was largely devastated by recent economic conditions. Not surprisingly, the biggest catalyst for reviving construction is money. When cash starts flowing, buildings start growing. The NYBC reported that it estimates residential construction spending will double between 2012 and 2015. That is fantastic news for the construction industry and a sign that, perhaps, just perhaps, the rebound is permanent and we will start to see some real growth and recovery in the NYC construction industry in 2014.
One glim item to review in the NYBC report is that as of November 2013 Brooklyn still had 267 stalled projects. But, on the bright side, that was a 17 percent decline from November 2012. This appears to be yet another sign that the recovery is trending positively. With booming hot spots like Williamsburg, Brooklyn figures to be a leader in the revitalization of the construction industry once those 267 projects get moving. While money is certainly going to be the focal point of getting Brooklyn on track, we cannot help but look at the red tape as well. Undoubtedly some of those 267 sites were shut down by the city for any number of violations and clearing those violations will help Brooklyn keep up with booming Manhattan. This leads us to our tips for the NYC construction industry in 2014…
(1) Be careful who you work with. KP managing partner Vincent Pallaci was recently asked “what are your successful clients’ keys to success?” His answer: “they do business with good people. When you work with questionable people, you get questionable results. Developing relationships and having a level of trust with your customers, vendors and subcontractors greatly reduces the chances of something going wrong. Surround yourself with good people and you are on the path to success.” Of course profitability in the construction industry is all about managing risk. Getting yourself into a situation with the wrong kind of people increases the risk and decreases the chance of profitability.
(2) Review your policies and procedures. The New Year is always a good reminder to take a day to sit down and review your policies and procedures. Pull out your employee handbook and make sure it is up to date and that everyone has it and understands it. Pull out your insurance policy and review it with your broker and/or attorney to make sure you still have all of the coverage you need and that you understand your rights and responsibilities under the policy. Pull out your form contracts and review them with your attorney to make sure they are up to date and you understand them. This is a good chance to discuss any problems you encountered during the previous year and see if you can avoid those problems with contractual changes in the future. Sit down with your accountant and talk about cash flow. If you have not looked at your profit and loss statement recently, get an updated one and go over it with your accountant. Make sure you understand it and see if he or she has any recommendations for reducing liabilities and increasing revenues.
(3) Know your industry. Many times when contractors, especially subcontractors, get into trouble it is because they venture out of their comfort zone. If you know HVAC, try and stick to it. If you are a great stone mason, you might not want to get into carpentry. There are two huge problems with venturing out of your comfort zone. First, if you don’t know the trade you might not be able to complete the project on time, on budget and to the high standards expected by your client. That translates into lost profits and potential litigation. Second, if you do not know the industry you may not be able to properly estimate the cost. This can lead to bad contracts that you struggle to get out from under.
Overall, it looks like construction will continue to grow in 2014. From everyone at Kushnick Pallaci PLLC, we wish the construction industry Happy Holidays and a prosperous New Year!