The construction industry was already experiencing an unprecedented rate of disruption before the COVID-19 pandemic changed everything in early 2020. In the coming years, changes in market characteristics and emerging disruptions will continue to drive changes in how we do business and how the building is accomplished. The COVID-19 crisis will not delay these changes but will amplify them.
The following evolving market characteristics will challenge construction companies to accept the heightened need for change and to move quickly to implement the necessary changes.
Rising customer sophistication and TCO
With a significant increase in investment from private equity firms and institutional investors, the level of customer sophistication is rising dramatically. In 2019 alone, these sources raised over $100 billion in infrastructure investment, a 24 per cent increase from 2018. The disruption comes from the fact that these customers have very different expectations in terms of delivery times, budget, and the level of engagement they receive from their construction companies.
Smart building technologies, energy and operational efficiency, and the flexibility of built structures are much higher priorities for this savvier customer as the total cost of ownership (TCO) begins to take precedence over choosing the lowest initial investment. Survey results indicate 90 per cent of respondents believe that the shift toward TCO will impact their day-to-day operations within the next 10 years.
Scarcity of skilled labour and changes in logistics
The labour shortage has long been a challenge for construction companies, and more than half of the survey respondents expect it to only get worse over the next 20 years. About 41 per cent of the current U.S. construction workforce will likely be retired by 2031, although it’s currently unclear whether fallout from the pandemic will impact those numbers.
Updated regulations for safety, sustainability, and building code standardization
Regulations around the use of more sustainable construction materials and processes are constantly being updated, often becoming stricter over time. And, they vary widely based on location. Survey responses on the effect of changing regulations on the construction industry 90 per cent of respondents see these regulations impacting their work within the next decade, while nearly ⅕ of respondents expect to see an impact far sooner — perhaps in 2021.
At the same time, health and safety regulations are evolving as well. During the COVID-19 pandemic, the need for social distancing and appropriate safety equipment and supplies has required some significant changes to how many crews operate, and there’s an added cost. In all likelihood, many of those requirements will remain after the current pandemic has passed.
The move toward an offsite, product-based approach to building has been going on for years now. But, the more controlled factory environment of offsite facilities has proved far more manageable during the pandemic, highlighting many of the benefits of prefabrication. As a result, many construction companies are investing in their own offsite manufacturing facilities, or in long-term contracts with established factories. For example, 40 per cent of homebuilders in the UK confirmed their current or planned future investment in proprietary manufacturing facilities back in 2018.
Going forward, ongoing advancements in automation, machine learning, and AI will continue to enhance the quality and efficiency of these facilities. Robotic automation, drone technology, and robotic imaging technologies will likewise have an impact on cost control and efficiency on the job site in the years to come.
Development of new materials
One of the key improvements in construction materials in recent years includes lightweight materials like light-gauge steel frames, cross-laminated timber, and ethylene tetrafluoroethylene (ETFE), a glass alternative that’s 99 per cent lighter and stronger while being more eco-friendly, more flexible, and better and transmitting light. All of these lighter, stronger materials will impact the cost as well as the logistics of transporting materials to a site.
Digitalization of products and processes
The widespread impact of the digital revolution in construction can be summed up in four main categories:
Smart products and operations - by integrating smart components and sensors with the internet-of-things (IoT), buildings can become highly automated and operations become data-driven. Combined with advanced building information management (BIM), this can greatly reduce operational and maintenance costs over time. the construction digital twin feedback loop
Design - the most advanced BIM technology allows for a complete “digital twin” of a structure to be created before the ground is even broken. With full reliance on this technology, designs can be integrated into the rest of the value chain, optimizing the entire construction process.
Construction and production processes - by utilizing advanced digital technology, onsite collaboration is greatly enhanced, reducing costly rework and improving efficiency at every stage of construction. These improvements can be seen in the actual building process, as well as in peripheral activities like job site security and access control, asset management, and workforce management.
Channels - online marketplaces, which have seen incredible growth over the last two years, can transform interactions for buying and selling goods across the value chain, disrupt distribution, and reshape construction logistics. About 40 per cent of the venture capital invested in online marketplaces since 2018 has gone to construction-based startups.