Throughout the duration of 2020, the COVID-19 pandemic has disrupted nearly every industry, including the construction industry. And while the market has changed, it is faring better than others like travel and hospitality. However, one thing construction hasn’t hasn’t been able to avoid is the economic decline due to shutdowns from the pandemic. Because of this, many businesses and organizations are exercising caution and are hesitant to invest in modernizing their buildings or building new facilities.
It isn’t all bad, though. There are some trends that will endure despite the pandemic and continue to drive the industry forward.
Explore where the construction industry is now and what new developments will move it forward into the future.
Where We Are
While construction endeavors have continued for much of the US since the beginning of the pandemic, many projects that were in the planning or bidding stages have been postponed or terminated as a result of economic uncertainty, decreased demand for new construction, and increased safety concerns.
According to the Commercial Construction Index reported by the U.S. Chamber of Commerce, contractor confidence in the market is expected to decrease markedly over the next year but is more optimistic in the 24-month forecast. Only 16 percent of contractors reported high levels of confidence in the ability of the market to provide sufficient new business opportunities in the next year, and those with low expectations have increased dramatically compared to previous quarters.
However, 59 percent of contractors still fall in the moderate range, suggesting that most are expecting activity to continue at a level that will at least support their businesses. Surprisingly, more contractors are highly optimistic about the market’s ability to provide sufficient new business opportunities in the next two years than in the last quarter, which may be suggestive of an expectation of pent-up demand in some sectors as the economy recovers.
Where We’re Headed
Even with the relative volatility of construction output over the next year, there are some promising construction industry trends to look forward to that will positively impact the future of the construction industry long-term.
Let’s dive into a few of the most notable predicted trends.
Increased Workplace Safety
Increased workplace safety measures are expected to continue on construction job sites for the foreseeable future, as new health and safety procedures will be required to mitigate the spread of COVID-19. These enhanced protocols will include things like staggering shifts to keep job sites from overcrowding, regular use of masks and hand sanitizing, and restricting crews from sharing items like tools or protective equipment.
Enhanced Customer Sophistication and Total-Cost-of-Ownership (TCO) Pressure
Customers and owners are both becoming increasingly sophisticated and the industry has seen an influx of capital from more savvy customers. From 2014 to 2019, private equity firms raised more than $388 billion in funding for infrastructure projects. In 2019, $100 billion in funding was raised, which was a 24 percent increase from the year prior.
In addition to enhanced customer sophistication, client demands are also evolving. Performance, TCO, and sustainability are all key initiatives, with smart buildings, energy and operational efficiencies, and structure adaptability becoming critical priorities moving forward.
Sustainability Spotlight
Sustainability is another top trend we’ll see grow rapidly within the construction industry moving forward. Physical climate risks have continued to grow, and construction companies will place greater emphasis on considering environmental impact when sourcing new materials, in addition to seeking out sustainable manufacturers. In precast construction, water consumption, dust, noise, and waste will all continue to be critical factors for sustainability initiatives as well.
Digitalization & New Technologies
Digitalization and the implementation of new technologies are also set to change the game in the construction industry. The adoption of cloud-based products will enable design and construction processes to be more collaborative and teams to work more effectively throughout project life cycles. Moving to the cloud will help break down silos, allow for greater control of the value chain, and even facilitate shifts towards data-driven decision-making.
Building information modeling (BIM) is a 3D model-based process that provides professionals in the architecture, engineering, and construction industry (AEC) with the insight and tools needed to plan, design, and construct buildings and infrastructures. It’s another inventive technology that will change the sequence of decision-making and call into question traditional engineering, procurement, and construction models.
These innovations will change how companies approach operations, design, and even construction. As more teams begin to embrace new digital solutions, companies will be able to improve efficiencies, saving time and cutting costs, while also mitigating the impact of the pandemic, allowing them to set themselves up for long-term success.
Modular Construction & Prefabrication
Another innovative industry trend is the increasing use of modular construction and prefabricated buildings, which is anticipated to continue in the post-pandemic era, as it easy to socially distance on these job sites. Another benefit of modular and prefabricated construction is that the equipment being used is designed to facilitate easy movement of large building components with fewer workers, reducing labor costs and making it even easier to remain distanced when needed.
Prefabricated buildings are ideal for the post-pandemic era, as they provide the ability to add on when additional space is necessary but can also offer an affordable solution that is temporary, which is a desirable option, especially in these times.
Design and Engineering Services Disruption
According to a McKinsey and Company report on the next normal in construction, design and engineering disruption could fundamentally change what it means to be an engineer or an architect in construction. Historically, these professionals have applied their expertise to creating designs and specifications for individual projects, making each design optimized to meet the project’s unique requirements.
However, it’s anticipated that in the future we’ll see these stand-alone professional services firms closely collaborating with productized and branded developers, off-site construction firms, and highly specialized contractors as an integrated R&D-like function. These firms will add value by standardizing structure and subsystem designs and developing standardized design libraries of products for their target segments.
These standardized, modular designs could then be reused across a large set of construction projects, allowing design and engineering firms to influence construction industry standards going forward. As the industry shifts to a more product-based approach, the challenge for engineering and architecture firms will be to retrain their existing workforces and hire the right talent.
Prepare for the Future of the Construction Industry
No one knows exactly where the construction industry will be in the future. However, we do know that industry stakeholders need to come together to work to prepare for the challenges that loom ahead due to the COVID-19 pandemic and its economic impact. Planning to train the next generation will also ensure that new teams are prepared to lead the industry forward and that the outlook for the future of the construction industry will remain bright.
Interested in learning more about the construction industry and precast construction? Explore the PCI Mid-Atlantic Solutions Center for helpful resources and get in touch with PCI-MA for precast information, higher education partnerships, and more.
