building and construction future of job sitesThe building construction industry is at a tipping point and the job site is one proving ground for the future of the industry.

The job site is a complex environment with many different constituents and agendas—owners, developers, architects, general contractors, and subcontractors—and all are working to organize an efficiently run and cost-effective project. However, according to a study conducted by USG Corporation and the U.S. Chamber of Commerce, only one in ten contractors actually considers job sites to be very efficient.

One reason for this perceived lack of efficiency is that construction, like certain aspects of the healthcare and automotive industries, has historically been slow to adapt to and implement new technology. In an industry where it can be a challenge to be profitable, it can also be difficult to invest in expensive technologies despite the long-term cost advantages.

There is a unique set of challenges facing the construction industry. Construction is labor intensive, it is highly correlated with the peaks and valleys of the economy, and it is dependent, to a significant extent, upon a well-known, uncontrollable, and unpredictable factor: the weather. On top of these historic issues, the construction industry is facing a number of significant new challenges.

Skilled Labor Shortages

There is currently a skilled labor shortage in almost all trades, be it electricians, carpenters, etc. According to the same USG study, nearly 90% of contractors have reported being, “at least moderately concerned about the skill levels of the workforce” and 58% of contractors, “want to employ more workers in the next six months but are challenged by availability and cost.” So, larger construction companies are investing in training programs similar to vocational schools in an attempt to attract workers that they can “train-up” into these underserviced positions.

Raw Material Price Fluctuations

The price of certain commodities and raw materials has increased this year due to various trade negotiations and increased tariffs. For example, according to the U.S. Department of Labor, steel-mill products and other construction materials have seen a double-digit price increase in the past year including a 20% price hike in U.S. hot-rolled coil.

That brings about a great deal of uncertainty when it comes to the price of raw materials, which becomes especially difficult to forecast and hedge against.

building and construction job sites safety regulations hard hatsEvolving Safety Guidelines and Regulations

Advances in technology can track workers and materials and can also provide a better understanding of where the dangers on a project might lie. Guidelines regarding wearable protective gear—depending on where you are in the job site—are being enforced and followed more diligently. It adds cost to the system, but a cost that is ideally recouped due to less lost hours due to job site accidents.

Green and Sustainability Demands

There is a wide range of evolving government-mandated and private initiatives driving new construction to be more “green” or sustainable. Sustainability can include green, but it can also mean lower costs and increased efficiencies over a building’s lifespan. However, sustainable or green construction will often require an upfront increase in cost.

Fortunately, there are significant market disruptors that are impacting the construction industry.

Drone Technology

Drones continue to improve tasks related to job site mapping, design, construction progress tracking, and inspection. In the past, project managers would need to walk the entirety of the site. Now, project managers can use drone technology to see everything on the site in far less time and with less effort allowing them to provide critical feedback and move projects forward at a more rapid pace.

Prefabricated and Modular Construction

Prefabricated and modular construction advances offer a number of advantages in terms of cost, speed, organization, and consistency. According to USG and the U.S. Chamber of Commerce report, “More than 80-percent of contractors identified on-site construction as a key approach for improved job site efficiency, labor productivity, and schedule performance.” Further findings demonstrate that “about half of contractors use these approaches, and 67% of general contractors expect to see increased use in the next three years.”

Mobile Technologies & Site Safety

While mobile technologies allow for vastly improved project and job site communication, they are also key to improving job site safety. Wi-Fi, GPS, and wearable technologies are making sites safer and decreasing the number of days lost on a job. The upside is that many of these technologies are relatively inexpensive.

building and construction job sites planning blueprintsSoftware Solutions

Project management software is contributing to more efficient supply and logistics planning. Most contractors are using some kind of project management software, be it an app with very specific functionality or a fully-integrated planning solution, which is a trend that will continue and trickle down to smaller construction companies.

Advances in Building Information Modeling (BIM) software continue to provide game-changing approaches to design, feasibility modeling, and project cost predictability. In the past, the smallest change to a building design would literally send architects back to the drawing board. Now any change, no matter the size or scope, can be rapidly implemented with BMI software.

Smart Building Technology

Smart building technology can contribute to meeting sustainability initiatives and provide significant cost-over-life advantages. From mechanical systems to security, buildings are maximizing efficiency through self-monitoring systems as basic as lighting that turns on and off automatically based on time of day or number of occupants.

Private Equity and Investors

All of these advances explain why we’re seeing building construction technology firms attracting record levels of investment. Because of their ability to achieve efficiencies, we are also seeing private capital increasingly seeking out more engineering and construction acquisition opportunities, a vertical that was previously not on many radar screens.

Ultimately, the key to success for those who provide products and services to the construction industry will continue to be the ability to achieve some combination of the classic maxim of better/faster/cheaper. They’ll need to deliver a product or service that is at least on par with—or preferably, better than—the current competitive set, deliver that product or service faster and/or more reliably, and ideally provide these advantages at a better price or more attractive ROI. We see examples of this happening now and this will continue, ultimately leading to revolutionary shifts in this industry.

For your next construction related project contact Chuck.Bean@martecgroup.com

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