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Association of General Contractors Warns About Industry Challenges

By on June 25, 2021

AGC President Umberto Donato said the hurdles could hinder the island’s reconstruction process

The president of the Puerto Rico Chapter of the Association of General Contractors of America (AGC-P.R.), Umberto Donato, said the construction industry faces challenges that could affect the island’s reconstruction process, and the government’s ability to maximize federal funds available for the repairs and reconstruction for disasters related to the hurricanes of 2017 and the earthquakes of 2020.
Donato addressed the industry’s hurdles during the Association’s Monthly Luncheon Meeting at the Puerto Rico Convention Center where Economic Development Secretary Manuel Cidre was the guest speaker.
“Although we have seen progress in certain important areas, the industry continues to experience challenges such as labor shortages and inflation in the costs of construction materials and payroll,” said Donato.
Construction industry projections point that 100,000 workers are needed over the next several years to carry out the anticipated reconstruction work.
This amount represents 60,000 more workers than the 30,000 employed in the industry.
“We look forward to attracting new generations of men and women in Puerto Rico to join the construction industry and leave their mark,” Donato said.
Another issue of great importance is the increase in the cost of construction materials and payroll. AGC-P.R. understands that the higher inflation, the less the money available will yield to rebuild Puerto Rico; and the higher the risk for construction companies entering into contracts under constantly changing price structures.
“It is urgent that we take measures to address the factors that we can control at the local level,” said Donato, stating that the government should evaluate proposals to establish adjustment clauses in contracts in government agencies at the local level, similar to the mechanisms that exist in federal contracts.
Regarding the rise in payroll costs, AGC-P.R. recommends carefully analyzing the risk represented by labor agreements in construction projects. These could significantly increase construction costs, limit the ability of local companies to carry out works on the island, and further slow down the reconstruction processes.
AGC-P.R. is a construction association in Puerto Rico. It has more than 300 partners, including general contractors, subcontractors, specialty contractors, and suppliers of materials and services – who represent 80 percent of the construction activity on the island.

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