Perils and Pitfalls of Remodeling in Boom Times

The overall economy in the metro-Denver area seems to be the best that I can remember during the three generations that my family has been living here. The unemployment rate is at a record low. There are more tower cranes over the Denver skyline then ever before. Everywhere you look there is construction activity. Roads are being repaired. Houses are being built and repaired. New businesses are popping up. Everyone who lives in the area is impacted by the current super charged economic growth. Although it is a great time to remodel your home, there are also some problems that arise during a construction boom. Here are a few of them.

Skilled construction labor is very difficult to find and retain. There is currently a great shortage of carpenters, plumbers, electricians, drywallers, tile installers etc. Just about any trade that is required to complete a remodeling project is in short supply. There are multiple reasons for the shortage. Many experienced workers left the trades during the great recession (2008–2011) when 75% of the single family home builders in metro-Denver went out of business. Hands-on work has gotten less attractive to the younger members of society. Young adults are continuously told that they have to go to college if they want to succeed, instead of pursuing a career in the trades. The average age of workers in the trades has risen as fewer younger workers start up and more older workers retire. Lastly, demand for skilled workers is way up because of the boom.

The shortage of workers is leading to project delays and increased costs as wages rise. As a homeowner, what can you do about this? Primarily, select an experienced, reliable, trustworthy contractor. Since companies that have these qualities are also the companies that most skilled workers prefer to work for, these are the types of contractors that are more likely to have the quality help that you need to get your project successfully built. Another screening tool is to look for companies that were started before, and survived, the great recession. These are generally going to be some of the best managed companies in the business. Because they are well managed, they will be able to attract not just employees, but also experienced subcontractors. The remodeling business, especially for companies that can do larger projects ($100,000 and up) has become much more of a team practice. It requires the successful coordination of many different players. This takes management skill.

Costs are rising. This is not entirely a bad thing, because as a home owner, the value of your home is rising faster than construction costs. This is making remodeling relatively more affordable, because in the Denver area remodeling prices are not rising as fast as new and existing home prices. Although the really good, experienced remodeling companies may at first glance seem more expensive, you will usually experience lower costs over the lifetime of the project. Well built projects last longer, need less maintenance and repairs, and give you, the homeowner, greater enjoyment living in them. Another thing to keep in mind is the cost to you of a substantially delayed (months late) or unfinished project. Unfortunately, the remodeling industry is notorious for these problems. This includes both the “semi”- professional companies and the do-it-your-selfers. My observation is that DIY managed projects take much longer, at least twice often 10 times longer, than similar projects built by H & H Builders. Unfinished projects are much more costly than delays, because usually much of the original work was done badly and has to be redone, meaning it is paid for twice. Contractors also always charge more for finishing up someone else’s’ work. Unfinished work also comes about when due to inexperience or bad intent, the original price given for the work is too low to actually build the project, so the contractor abandons the project rather than suffer a loss. Remember that we are in a construction boom, so there is always another potentially more profitable project available.

The boom is creating delays and shortages in getting materials and products that are needed to build remodeling projects. Doors, cabinets, windows, tile, flooring and other items are more frequently being placed on back order. Many of the delays can be avoided through proper scheduling and ordering items earlier, allowing more lead time for delivery. Once again a skilled and experienced contractor can do this type of planning, making it more likely that your project will be done on time.

I don’t mean to discourage you from remodeling your home, after all it is the business I am in, but these problems are real. If they are properly dealt with, then you can have a great experience remodeling your home.

John A Happel PE, CGR, CAPS
for H & H Builders LLC

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