In recent years the construction industry has gone through dramatic fluctuations due to factors like COVID-19, material acquirement delays, and changing consumer behaviors. Miraculously, the industry still managed to pull off a win, going 17% above last year’s record to a whopping $1 trillion.
Industry experts predict a slowdown in this upward trajectory due to the rising interest rates. Fortunately, owing to government funding, particularly for commercial projects, the construction industry will likely not feel the brunt of any ensuing economic turmoil.
To aid your construction company in remaining competitive in the times to come, we’ve assembled a list of trends to watch for.
1. Virtual Design in Construction
Unsurprisingly, digitalization is becoming a major part of the construction industry.
One significant trend is the adoption of advanced technologies such as Building Information Modeling (BIM), drones, and augmented reality (AR) in construction processes. These technologies enable improved project visualization, enhanced collaboration, and streamlined construction workflows, resulting in increased efficiency and reduced costs.
With techniques like virtual design and Construction Management Software, contractors visualize structures before their inception. This is particularly useful in multi-million dollar projects, as according to research roughly 30% of costs in the construction sector amount to faulty builds. Virtual design helps cut down on this by allowing builders to first build structures in a virtual environment.
Construction is a very complex procedure, with multiple parties involved and a variety of tasks all happening at once. This is why digitization is especially crucial in this sector. Technologies like Construction Management Software (CMS) allow for the streamlining of data by making all the documentation accessible in one place.
2. Modular Construction
General contractors and builders are increasingly moving toward modular construction as while keeping costs low, it also makes for speedier construction and less waste of resources.
Modular construction refers to the practice where generally 60% – 90% of a structure is built before bringing it onsite. The benefits this brings are so substantial that Dodge’s 2020 Prefabrication and Modular Construction Report found that almost 90% of contractors stated that “prefabrication and modular construction methods are more beneficial than traditional construction.”
Not surprisingly, modular construction is gaining rapid traction and is expected to be the next big thing in the construction industry.
3. Document Automation
The nature and volume of transactions in the construction industry are vastly complex, not to mention the data inputs. To gain further insights into this read data entry/AP improvements in high-pressure environments.
By embracing automation processes like CRM and accounts payable automation the industry is seeing a visible improvement in efficiency and revenue growth.
Automation eliminates the need for manual data entry, formatting, and repetitive tasks involved in document creation. This significantly reduces the time required to generate documents.
Furthermore, it streamlines the entire process by eliminating errors and inconsistencies commonly associated with manual entry. Automated document systems often feature cloud-based platforms that facilitate collaboration among project stakeholders. Multiple team members can access, review, and edit documents simultaneously, promoting efficient communication, mitigating errors, and reducing delays.
Automating documents in construction improves productivity, accuracy, and collaboration while reducing risks and costs. It allows construction professionals to focus more on critical tasks and decision-making, leading to better project outcomes. Overall, document automation has revolutionized construction company finances.
4. Internet of Things (IoT)
Smart cities equipped with IoT are seeing a rapid increase in the construction industry. A smart city refers to areas whose infrastructure is embedded with software and technologies to connect and exchange data with other devices. This aids in a more smooth and efficient running of systems. According to the projected reports of the International Data Corporation (IDC), the smart city market will grow to a resounding $203 billion by 2024.
This trend will have a major impact on the construction industry with investments in digital transformation technologies like the IoT becoming a must. To keep in pace with the times, the organizations operating in the construction industry would need to act fast as many market-leading companies have already made agreements to construct smart cities in the coming year.
5. Going Green
Given the environmental crisis we are facing today, it is our moral obligation to do all that we can to reduce our carbon footprint. Construction companies, in particular, are being held to higher standards in the era where awareness is widespread. Therefore, companies need to take ethical stances to exist in an increasingly perceptive society as building operations alone accounts for the majority of greenhouse gas emissions in the construction and real estate sectors.
The design and construction process should be sustainable with a focus on optimizing limited resources.
The seriousness of this factor can be analyzed from the McKinsey report that perpetrates that 90% of the construction industry analysts believe that building green to become environmentally sustainable is no longer an option.
6. Labor Shortages
Though the construction industry has been amid a labor scarcity dilemma for around a decade, in the past year it has become an official crisis. The year 2022 represented a 40% increase in the jobs left open in the construction industry from 2021.
The Association of Builders and Contractors states that “the industry would need to hire 650k additional workers on top of the normal hiring pace in 2022 in order to keep up with demand.” These numbers are not expected to go down any time soon.
A survey found that a resounding 89% of construction firms face problems in filling positions while 61% are suffering project deferrals as a consequence of labor shortages.
This is a serious blow to completion rates and project timelines.
To deal with this crisis industry experts predict a sharp increase in labor costs to hire and retain the workforce. Aside from this, other incentives like retention bonuses and marketing tactics are being applied through the likes of social media platforms.
7. Rise in Material Costs
Global economic triggers have resulted in material shortages and thus, a rising price for these resources. More than 90% of builders attest to facing shortages in sourcing the required materials.
According to a survey by the Associated General Contractors of America, prices for construction materials employed in nonresidential projects like asphalt roofing products, aluminum, steel, and diesel fuel have risen nearly 17% overall from 2021 to 2022 – while if considered individually, this percentage can be roughly doubled.
The Bureau of Labor Statistics Producer Price Index showed a resounding increase in the price of steel mill products with a 123% increase year-over-year since August 2021.
This is damaging the bottom lines of the companies operating in the construction sector with operating profitability and industry margins taking a turn for the worse.
8. Technology and Automation
Tech advancements like 3D printing are seeing a rise at an incredible compound annual growth rate, projecting the use of this construction method to increase by more than 100% by 2030.
With the call for environmental sustainability on the rise, 3D construction is gaining rapid traction with many companies going further in the bid to go green by swapping fiber, concrete, and geopolymers with biodegradable materials like soil, mud, and straw.
This technological advancement brings about a horde of benefits for the construction industry, like timesaving, a decrease in costs, and getting the vote of approval from environmentalists while being a masterstroke in the way of marketing.
Further to this, the use of robotics and autonomous construction vehicles is also enhancing the efficiency of construction companies by reducing labor costs, time, and wastage.
Automation tools like the TyBOT, which ties rebar, are eliminating the human factor in the intensely laborious activity while adding the element of efficiency, are exploding in popularity.
Similarly, the FieldPrinter is another technology that is revolutionizing the construction industry. It is capable of autonomously marking layouts on concrete slabs which is more than ten times faster than manual input.
Furthermore, the use of autonomous construction vehicles is also rapidly gaining the top spot for the next big thing in the construction industry.
The Bottom Line
The construction industry is experiencing several notable trends that are reshaping the way projects are planned, designed, and executed. Among these, environmental sustainability and automation are the most prominent trends, rapidly gaining momentum. The fact that these factors also assist in cost reductions is contributing to their rapid adoption.
There is a growing focus on sustainability and green building practices. With increasing environmental concerns and stringent regulations, construction companies are incorporating sustainable materials, energy-efficient designs, and renewable energy sources into their projects.
The construction industry is also witnessing a shift towards offsite construction methods, including modular and prefabricated construction, to meet the demands of faster project timelines and cost-conscious clients.
Moreover, growing labor shortages, among other things, are prompting the adoption of robotics, automation, and artificial intelligence (AI) in construction. These technologies assist in repetitive and labor-intensive tasks, improve worker safety, and increase overall productivity.
Integrating these technologies into construction processes helps address the labor shortage dilemma and optimizes project outcomes.
Lastly, the construction industry is witnessing a shift towards data-driven decision-making. With the advent of advanced analytics and the Internet of Things (IoT), construction companies collect and analyze vast amounts of data to gain insights into project performance, optimize resource allocation, and improve project outcomes.
By embracing these trends and adapting to the changing landscape, construction professionals are positioning themselves for success in this increasingly dynamic and competitive industry.