2020 Predictions for the Construction Industry: We Read The Reports So You Don’t Have To

February 5, 2020

In the first quarter of every year, industry reports are released in an attempt to learn from the past year and ensure a successful “next” year. Deloitte has done this in its 2020 Engineering and Construction Industry Outlook report. This particular report is special since it marks the start of a new year and a new decade. In this report, they broke down the top trends for the coming year. 

The Top 2020 Construction Trends To Watch For

1) The difficulties facing the industry will require contractors to be better at managing and executing projects.

According to the Deloitte Q1 2020 report, the average global gross earnings of construction projects is only 5.5% of sales. This number speaks to four things happening in the industry:

  1. Projects growing in complexity with new regulations, technology, and environmental sustainability
  2. A need to reduce bid costs in order to keep projects away from competing international companies
  3. Raw products like steel becoming more expensive
  4. Continued difficulty in finding and hiring enough people to fill labour gaps

In order to raise that profit percentage Deloitte argues that modular construction and prefabrication of project components will grow to be more popular. The creation of modular assembly yards could become a construction niche industry among itself if this trend grows as predicted. Both of these strategies for construction offer a more efficient, lower-waste and cost-effective manner of completing a project.

Those who can adopt and adapt new technological advancements in the industry will be the ones leading the way into a more profitable future. Smart project management utilizing new tech tools will help to make the industry more efficient than ever.

What Does This Mean For Construction In the Long Run?

Modular construction could be a great way to mitigate costs, but could become the fast-fashion of construction. The drive for green, sustainable, yet beautiful buildings could challenge the ability to truly implement a modular construction model in the industry on a grand scale. 

A true method to drive efficiency into the industry is the implementation of technology to streamline processes and alleviate these pain points from the building process. Taking cues from manufacturing practises like lean management could help to streamline the process and reduce waste. Technology will also help to drive this. 

Other project managing processes like just in time delivery, material recycling, locally sourcing materials and equipment, and leaning on new technology to reduce labour costs can also help to reduce waste and costs on site.

2) Technology will continue to revolutionize the industry

Deloitte dubbed it the “robotic revolution” of the industry. No matter what you want to call it, it’s clear that autonomous construction equipment and drones are just the beginning. Technologies – whether it be site monitoring, fleet management, or exoskeletons and robots – will be seen on construction sites more than ever in the coming year and the years to follow.

Beyond this, cost-budgeting, people-management technologies, customer relationship management tools and site monitoring mechanics will be applied to bring the digital age to the industry. 

The application of Artificial Intelligence to building design, construction engineering, and even heavy equipment rental is helping both large companies and independent contractors source more efficient and cost-friendly ways to complete projects.

What Does It Mean For Construction In the Long Run?

Talk about Artificial Intelligence and large technological advancements can be intimidating for small and mid-sized construction companies. The goal for all contractors, large or small, should be to do their best to use technology to ease their processes, in whatever way that looks for them.

Not all construction tech has to be large programs or massive company-wide overhauls. Using technology that works for you and your company is the best way to make construction tech work for you.

Efficiency is a hard question for contractors and operators to answer because it can look different for everyone. Identifying efficiency gaps in your own organization can be more beneficial than trying to jump on board the technology train at the highest level that is out there. Using Customer management systems or even transforming your paperwork system to a digital process can be a great efficiency improver for some businesses out there. 

Be aware of the changes in the industry but focus on what works best for you, your niche, your location, and your business model. 

3) Increasing demands for infrastructure work may demand new partnerships and project restructuring

The infrastructure in the United States is in dire need of repair. It’s estimated that in order to update and repair all the crumbling infrastructure by 2025 will cost the country $4 trillion USD.

In response, the government has budgeted $2 trillion over the next 10 years – with $200 billion for 2020 – towards the projects. It’s the biggest infrastructure investment in US history. But still, it may not be enough.

Image borrowed from Center for American Progress.

According to this report, one way to combat this missing budget could be from the building of mutually beneficial relationships between private and public entities.

This practice would mirror those in European countries such as France and Italy, where about 76% of major roads and highways are tolled, and about half of all motor traffic in 2015 took place on private roads.

Another takeaway from the deteriorating condition of US infrastructure is the need to increase inspection and maintenance frequency. Focusing on the longevity of a “lifecycle” approach to infrastructure could prevent this kind of national decline from happening again.  

Another shift that Deloitte speaks to regarding infrastructure improvement is the need to seek materials that are sustainable, have natural longevity, and are easier to repair and maintain.

What Does It Mean For Construction In the Long Run?

The partnership between contractors and companies – whether it be private or public infrastructure – to include contractors in infrastructure inspection could create some competition. It could be possible for contractors to say a certain amount of work is needed with the goal of then being hired and paid to do the work – whether it is needed or not. 

The life cycle approach to a project could lead to a snow removal contract-type relationship where companies are held on a retainer what would be paid every month, knowing that whether its 10 cracks or 1000 cracks, that contractor would be responsible to repair that piece of infrastructure. 

So what does this mean? As times get tougher for everyone in the industry, it’s time for contractors to come together and support each other along the way.

4) City transformation will continue in 2020 as Smart Cities Rule Supreme

By 2050 68% of the global population is predicted to live in a city. As cities become more popular, the appeal of developing smart cities does as well. Environmental sustainability and the ability of digital enablement to improve the quality of life in urban areas are two trending areas that are continuing to grow in popularity and use, even if an entirely smart city still seems futuristic.

Image borrowed from J&C Group.

Smart infrastructure and Artificial Intelligence (AI) are being used to monitor and improve asset use. Reducing water and energy consumption through technological tracking will allow buildings to aim for a more environmentally friendly lifecycle. LEED Certification is a part of this; It’s a status awarded to certain buildings that fit specific environmental and sustainability targets. 

Eventually these technologies will make way for digital sensors to oversee traffic and public transport, and smart monitoring of public spaces. The hope is that creating a smart city will lead to a safe, healthy, and easy-living city. 

As the focus shifts to a future of Smart Cities, contractors will be tasked with proving their ability to bring something new to the table in order to catch the eye of municipalities who seek the best of the best to build these cities up.

Deloitte referred to it as the “ecosystem approach” where people with various capabilities will be brought together in a large partnership to present a cohesive vision and action plan to bring these cities to life

As Deloitte says,

“Understanding the landscape of this ecosystem play can help [engineering and construction] firms identify and invest in those smart technology capabilities that are most strategic for demonstrating proficiency in digital offerings related to smart cities, and subsequently develop expertise and experience in these areas.”

In other words, contractors should look at the emerging trends and figure out what niche they can focus on in order to become valuable in a specific section of the Smart City future.

What Does It Mean For Construction In the Long Run?

If the technological future can tell us anything it’s that working together, improving communication, and being proactive in business development will be the key to staying relevant in a new type of construction industry.

Advancing yourself and your people forward should not be an afterthought. Looking ahead at the trends, like Deloitte says, can include budgeting for training programs, focusing on your own project niche, or connecting with other local businesses to see what trends they are noticing in the industry. 

Pay close attention to the emerging trends while remembering that no one knows what technology will present itself in the next decade. Embracing technology as it comes with a curious mind can help set you and your business up for success in a Smart future.

Kevin Forestell

Kevin Forestell is CEO of DOZR and one of the co-founders. Kevin first got started as an entrepreneur when he founded Forestell Landscaping right after graduating from University. His love and passion for the industry and desire to help solve an equipment problem that contractors faced every day is what brought the founding team to start DOZR. Kevin is proud of the level of efficiency brought to the industry through DOZR and hopes that DOZR will help change the standard way equipment is rented.

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