In 1981, the Construction Financial Management Association (CFMA) was established and currently has more than 8,600 members in the United States and Canada. CFMA’s general membership is made up of contractors (general and specialty trades), developers, construction managers, architects, engineers, principals, and material and equipment suppliers.
In addition, CFMA also has associate members who are professionals in accounting, insurance, surety, software, legal, and banking industries, as well as other specialists who serve in the construction industry.
Given CFMA’s membership, we are well aware of the importance of construction financial professionals to the success of construction companies and to the industry at large. The construction industry is well known as an industry with a low level of barriers to enter the marketplace. Traditionally, companies have been created by tradesmen who were excellent at putting work in place. For instance, in the sector of the industry my company operates in (mechanical contracting), companies have been created by plumbers who were excellent at their job.
However, that is not a guarantee of success without one more important element. Success or failure has often hinged on having proper financial controls in place. Companies that have failed did not have adequate financial personnel to run the company’s financial operations.
Hallmarks of a successful company
A successful construction company has internal financial controls, understands its cash flow, and is properly capitalized so it can take on new and more ambitious projects. And in today’s climate of economic uncertainty, making sure you’re adequately funded when the economic downturn eventually takes place could mean the difference between survival and failure.
The issue of worker shortages is extremely important to construction financial professional since it has the dual effect of raising wages (simple supply and demand economics) and limiting company’s opportunity to increase their workload. I know of many companies that have told me they could double their workload if they had the workforce in place.
To reinforce how significant this issue is to our members, I would point you to our quarterly CONFINDEX survey. CONFINDEX measures our members’ confidence in the economy today as well as a year into the future. In this quarterly survey, we ask our members to rank the issues of greatest concern to them. Since the inception of this survey, worker shortage has been the No. 1 issue. In March, 74 percent of our members indicated they were very or highly concerned about the worker shortage in the construction industry. The next closest issue of concern was public policy regarding construction, with 20 percent of our members being very or highly concerned about that issue. The industry’s fragmented approach to solving this issue has not worked and the issue clearly demands an industry-wide initiative.