Nobody’s debating that the global construction industry is already in the midst of navigating seismic shifts in the market. According to experts, the changes have only just begun.
Rather than panicking or going into denial, arguably the most useful things construction company leaders can do are:
- come to grips with the realities that are transforming the industry
- understand how they’re likely to be affected
- plan how they can survive in a radically different future.
What are the realities transforming the construction industry?
The chance of a recession
While economists can’t pinpoint exactly when a recession will strike, they can look at historical patterns for indicators of impending downturns. The cyclical nature of the construction industry has shown that what goes up must eventually come down – in Australia, the USA and the UK, there are predictions that an economic downturn is imminent, which will inevitably impact construction.
Changing infrastructure trends
Unsurprisingly, technology is continuing to have a significant impact on what gets built, where and by whom.
- Increasing urbanisation across the world has meant that construction activity is focusing on fewer metropolitan areas, creating bubbles of heightened competition. This can affect pricing, availability and labour, which impacts all stakeholders.
- Technology is changing building trends. For example, ecommerce affects traditional builds in the retail sector; virtual learning affects traditional builds in the education sector.
- Entirely new building types have evolved, such as vastly larger facilities to house data centres (consider the likes of Microsoft, Facebook and Amazon).
Different spending patterns
- The rise of megaprojects also changes the landscape for construction companies. In America, spending on megaprojects (projects typically valued at over $1 billion) is expected to increase by 600 percent over the coming decade. While these projects represent considerable investments in construction, not all companies are equipped to undertake such large-scale projects. Megaprojects are also likely to shrink the pool of smaller projects and increase competition amongst construction companies.
In many countries, a shortage of skilled labour is already a problem. A recent Forbes article noted that:
“When the recession hit in 2008, 600,000 workers left construction jobs never to return. Today workers avoid construction jobs, perceiving them as dangerous, difficult, and dirty. Millennials of all income backgrounds entering the workforce would prefer to go to a four-year college or take on jobs in retail or transportation. In the US alone, there are 434,000 vacant construction jobs as of April 2019, according to the US Labor Bureau.”
The pressures of skills shortages can result in work delays and hits to the bottom lines of companies who have no option but to pay higher rates to subcontractors.
What do these changes mean for construction companies?
Resilience will be vital to survival
None of the challenges we’ve just listed look set to miraculously evaporate anytime soon. Construction leaders who are able to recognise the issues and strategise around them stand the best chance of surviving and thriving.
Construction tech becomes key
Venture capital investment in construction tech startups has surged in recent years, as the sector looks to technology to solve pressing problems.
Solutions are being developed in the areas of prefabricated construction, modular housing and software like sitemobi for cost-tracking, predictive analytics and project management. Advances in autonomous equipment (such as remotely controlled cranes) and trade robotics (such as bricklaying robots) address labour shortages, while drones and building information mapping (BIM) are helping companies to survey sites and plan work more effectively.
New thinking brings new opportunities
Importantly, these new technologies are refreshing the industry by attracting people with different skill sets, who are keen to work with these non-traditional tools. Construction tech brings with it the promise of innovative thinking, game-changing efficiencies and a brighter future for the sector.
What can construction companies do right now?
Plan for the future
Construction company leaders are being urged by economists to strategise for a decade characterised by disruption. While younger elements in the labourforce may have yet to experience a recession or downturn, leaders and managers would be wise to prepare them for the impacts by formally planning how to address upcoming challenges in their business.
Understand the numbers
Those with a firm grasp of the numbers in their company (revenue, margins, overheads) will be better placed to optimise their performance. Leaders should ask themselves:
- how they can improve their margins in the face of current and future challenges
- how they can track their costs better and improve efficiency by investing in software solutions.
Develop their business
As part of their future-proofing process, companies should look at what they do best and how they could capitalise on that to grow their business. This involves assessing customer needs and finding ways to align with them. Companies should draw on the knowledge of those inside the organisation, as well as leveraging the feedback of clients and the advice of their professional network and partners.
Sitemobi offers a fully integrated construction program management solution that covers real-time cost capturing, cost forecasting, document management, collaborative dashboards and reports. Our software uses the latest developments in mobile and cloud-based tech to provide construction projects with clear, reliable data for operational and strategic decision-making.
Simplicity, efficiency and sustainability are at the core of everything we do at sitemobi. Our engineering, development and support teams are always looking to the future, providing solutions and leadership as technology continues to transform the construction industry. Get in touch with us today to discuss how we can help transform your construction business.