How El Ni’o Will Affect the Construction Industry

Everything from regulation shifts to extreme weather can have a huge effect on the construction industry. It is essential for contractors to be prepared for the many different events that can affect their business.

That’s why there are vital questions concerning 2016’s expected impact from El Niño. From California to Germany, the entire construction industry has to do its best to estimate how these changing weather patterns will impact everything from supply chains and number of outdoor work days to contractor licenses and surety bonds. Here is who is expected to win and lose when El Niño comes.

California: Rain with a Side of Uncertainty

Everyone knows that any rain is a blessing for California at the moment. For that reason, El Niño is expected to benefit thirsty farmers in places like the San Joaquin Valley. But for construction firms, the prospect of losing the ability to work most days of the year, which is normally a huge benefit for firms in California, is worrisome.

More worrying than that are the potential ramifications. As blogger, realtor and broker Brigham Yen pointed out, “delaying projects is definitely going to have a (negative) financial impact.” If rainy days pile up, costly delays could send a shockwave through the industry, affecting everything from the ability for firms to take on new projects to different suppliers’ capacity. For example, lumber suppliers could experience enormous problems as a result of heavy rains.

Still, it’s not all doom and gloom. Many smaller firms focusing on areas like roofing or other weatherproofing projects are set to have a banner year. Demand is high for these services, and any firm ready to do post-disaster work will be set to benefit from any potential flooding. It was estimated that the construction industry picked up an additional half a billion dollars in business as a result of the 1997 El Niño pattern.

What the Rest of the United States and the World Can Expect

While California is by far the largest area of concern, plenty of other places are set to experience a significant impact. Within the U.S., all of the South is set to experience increased precipitation in the form of both rain and snow over the coming year, meaning that many of the flooding concerns that exist in California exist elsewhere as well. The North and the East Coast, on the other hand, are set to experience warmer temperatures and little else. For those areas, El Niño will likely have a far more limited impact.

However, even Europe will see changes in weather patterns as a result of El Niño. The construction industry there is expected to take a hit large enough to affect the EU’s overall growth rate. Germany, the EU’s largest economy, is particularly set to feel the impact, since the construction sector makes up a full 9 percent of its economy.

How Contractors should be Preparing for El Niño

The big thing that firm managers need to bear in mind as they prepare for this winter is liability. Extreme weather always means uncertainty, so it is essential to prepare for it. That means ensuring work contracts are prepared for any potential delays. It also means buying additional insurance, if necessary.

But it also means reviewing the terms of your construction contractor bond and other surety bonds. For instance, failing to meet deadlines could translate into violating the terms of your bond and result in a claim being filed. It’s essential to avoid this, as a claim that is found to be valid could prevent you from getting bonded, and therefore licensed in the future.

If you are wondering how exactly these bond issues all tie together, follow this practical contractor license bond guide for a detailed breakdown of every aspect of getting your construction contractor bond and avoiding claims.

How is your firm preparing for El Niño? Do you think it’s going to be helpful or harmful to your specific business and location?