Josh Migdal, partner with Mark Migdal & Hayden.

The construction industry may have been booming, but data now suggests that this marked boost has resulted in an accumulation of noted substandard work. According to statistics pulled from Courthouse News, the sheer number of construction defect claims in Florida has increased exponentially in the last decade. In 2008, there were only 31 construction defect complaints filed, but that number dramatically increased in 2017 to close to 1,000. These startling statistics indicate an extreme level of exposure for contractors, subcontractors and other big players in the industry.

The tight labor market may partially be to blame for these unsettling findings. In Florida, construction employment rose by 6.2 percent in 2017, making it one of the most rapidly expanding labor segments in the state. This may be good news for the average American worker: more jobs are available to those who have endured long periods of unemployment and wages are being driven higher.

However, the booming economy and increased development activate an underlying problem within the industry—an overpriced labor pool that doesn't have the requisite training and skills to perform the required work to properly complete a project. In fact, many high-ranking members in the industry have cited costs and availability of labor as one of their top concerns in the construction market. Add to that the rising costs of safety compliance, stricter timelines with punitive measures for missed deadlines and the ever-present danger of late or delinquent compensation on the part of the hiring client, and contractors and construction firms are hard-pressed to consider any and all solutions for keeping their businesses afloat.

Did these players bite off more than they can chew? As labor costs continue to rise, employers are forced to balance cost, quantity and quality of workers. Naturally, firms resort to engaging a greater portion of cheaper, unskilled labor compared to that of more expensive, skilled labor. On top of that, many construction firms do not take time or allocate resources to properly train and educate their employees. This may simply be a result of a business decision, or it could be indicative of an inherent skill shortage in the industry. Either way, this leaves property owners with an increased susceptibility to defects. Likewise, it leaves firms, contractors, and the like significantly exposed to potential liability in construction defect claims, as they continue to rely on an unskilled labor force that lacks proper training to complete complex construction projects.

The construction industry should be concerned about their continually expanding exposure. With all the questions surrounding the future of the construction industry one thing is for sure: while the construction market may have “boomed,” certain companies may go bust due to the corners that they cut.

Josh Migdal is partner with Florida boutique litigation law firm Mark Migdal & Hayden. As a trusted counselor and commercial litigator, Migdal represents clients such as banks, public and private companies, real estate developers, investors and owners, tech entrepreneurs, gaming operators, family offices, and hotels.