In 2022, a variety of landscape industry trends impacted design-build contractors, and will continue to have an impact in the years to come.
Previously, Judson Griggs offered tips in “Dos & Don’ts Of Landscape Design-Build,” gleaned from over 45 years of experience. In this article, he reflects on 2022 and offers his insights on the overall state of design-build, including challenges and trends.
WOW! What a year! This has been one amazing year for landscape design/build professionals. In my 40 plus years in the design-build side of the Green Industry, I have never seen a year quite like this.
Demand has never been higher for design-build services. Most of my clients have maintained backlogs of four to six months or more the entire year. They are now selling well into Spring 2023. It was not a question of if the client was going to do the project; most were more interested in when the project could be completed. With price resistance low, higher profits resulted and demand does not appear to be waning.
Yet with the good came challenges. I have found over the years that nothing is ever easy in the Green Industry. With the great demand for services, it should have been an easy year for higher profits and growth. Growth and profits did result, but it actually could have been better. The challenges were many:
Labor. The labor shortages that contractors have been facing for the past several years continue with no relief in sight. There are still two jobs open for everyone that is looking for a job. Applicants are short on experience and motivation. Contractors have had to be creative and look outside the industry to find workers to fill open jobs. H2-B was an option, but an expensive one. Quotas were raised mid-season, but it was too little, too late.
Inflation. You had to have been sleeping to not have been bombarded by the record inflation that we are experiencing. It has been in the news constantly. Unless you were somehow insulated from the rapid increases in prices, your potential profit margins were negatively affected by the high inflation rates. Even the most astute contractors that factored in higher than historical inflation in their pricing models found it was not enough. Few could have predicted inflation at 9.6%! With lead times out four to six months, many con-tractors were saddled with pricing that did not keep up with soaring costs for materials and labor. Many added price escalators into their contracts, but again, it was too little, too late.
Supply Chain. With the incredible demand for materials for design-build projects, shortages were everywhere. Pool kits, lumber, masonry materials, and irrigation pipe and fittings were all hard to come by. One contractor told me he waited five months for roof joists for a pool house he was building! Plant material was hard to come by too, especially large plant mate-rial. Contractors and buyers had to search far and wide to find large scale plant mate-rial for projects. Flexibility was necessary when it came to plant palettes for projects.
Weather Issues. Weather challenges were extreme. Heavy and prolonged rains delayed projects in parts of the east, while record heat and drought halted projects or caused some delays and/or cancellations in the west. The middle part of the country experienced the whole range of weather challenges.
Health Issues. New strains of COVID-19 continued to plague the country. This caused workers to miss extended periods of time at work. Contractors were forced to scramble and find ways for employees to work remotely. This past Fall has been an incredibly bad season for Flu and RSV, in addition to COVID.
Strained Systems. With the incredible demand for services most contractors were experiencing, it was difficult to say “no” to clients and their fantastic projects. Contractors soon found out, though, where their systems and processes were failing. Others without systems and processes in place quickly realized they needed to start building some. The old way of trying to remember everything in your head, or relying on one or two people to manage the influx of work, was not working. Most of my work with clients this year has focused on building new systems and processes or updating and re-engineering older ones. Too many contractors tried adding people to fix the problem. My warning was simple: “Don’t throw people at a problem!”