Ringing in a New Year means change, progress, and new beginnings.
With a new president in the White House, businesses around the world are left wondering what policies and agendas might impact business. And how. A new year also means new construction industry trends and uncertainty.
Numerous factors can affect the construction industry including labor shortages, material cost, and technology.
So the question remains, will the construction industry trends of 2017 boost business or will new policies and regulations have an adverse affect?
Let’s take a look.
1. New Leadership
With new leadership comes change and uncertainty. The construction industry has expressed mixed feelings regarding Trump’s presidency. Some positive changes under the newly elected president may include regulation cuts and an infrastructure proposal.
Under the proposed regulation reform, all federal agencies must create a “regulatory reform task force.” Their primary job will be to review existing regulations and focus on eliminating the costly and ineffective ones.
Trump promises a $1 trillion dollar infrastructure plan, involving public-private partnerships, to be implemented over the next 10 years. This could mean an increase in federal funding for the construction industry, as well as increased job availability.
Trump’s history of success in business and construction is also appealing for the industry. Though his ideas surrounding U.S. trade could negatively impact material costs.
2. Rise in Costs
Rising costs have historically made doing business difficult for most, and 2017 won’t be any different. Rising material and labor costs will be another construction industry trend this year.
The Associated Builders and Contractor’s reported the price of materials in 2016 actually declined .5% between October and November. Unfortunately, ABC’s Chief Economist is deeming this decline as “the calm before the storm”. It’s believed that higher wages, building costs, and increased interest rates are just around the corner.
Inflation is another major factor of increased costs. In order to do business, construction companies must inflate the price of materials. This price hike is then absorbed by the customer. Currently, construction costs are keeping ahead of inflation, but this trend won’t last forever.
3. Labor Shortage
Supply and demand. An age old concept that will be a major construction industry trend in 2017.
Skilled laborers are in high demand but short supply. Contractors are actually raising the average pay for a skilled worker to above the national average. This increase is something that most employers can’t afford to sacrifice from their profit margin.
The labor shortage can be attributed, in part, to the recent recession. Between 2011 and 2016, over 2 million construction workers were eliminated from their positions. Most never returned.
Clay Gordon, vice president and chief development officer of Nabholz Construction told the Wall Street Journal, “It’s just more and more difficult to get talent.”
There is less emphasis being placed on trade occupations and even fewer technical schools available for interested parties. Fewer workers also means delayed project completion and increased costs.
4. Technology: A New Construction Industry Trend
Though the construction industry relies heavily on its labor workforce, technology is slowly making its way into the construction world. One popular tool found on construction sites is the iOT.
The Internet of Things, or iOT, tracks and retrieves data from job sites. Wearable devices and even drones can detect potential hazards and identify when equipment is in need of repair. iOT is predicted to help cut down on material waste and mistakes that often impede completion times and impact costs.
Virtual and augmented reality is another form of technology that could positively impact the construction industry. It can also help foster the relationship between builder and client prior to breaking ground. The only downside to this construction industry trend is the possibility of machines ruling the workforce.
5. Safety on the Job
When working with heavy equipment and people’s lives, safety on a construction site is taken very seriously. Comparable to malpractice suits brought against doctors, contractors must be aware of repercussions due to injuries on the job. Keeping yourself and your business safe is a construction industry trend you need to be aware of.
In order to help protect honest contractors, New York City has recently developed the Construction Fraud Task Force. This task force investigates safety, fraud, extortion and other legal violations that threaten the integrity of the industry.
Department of Investigation (DOI) Commissioner, Mark G. Peters, explained that those who commit crimes are often the same offenders of general safety practices. “What the partners on this Task Force have seen again and again in construction fraud investigations is that those who ignore integrity also undermine safety.”
6. Modular Homes Making Things “Easy”
With an increase in both material and labor costs and a decrease in labor availability, alternatives to traditional construction are becoming a construction industry trend of the times. One alternative to on-site construction is the modular home, which offers consistency and fast results.
Modular homes are constructed off-site, which means no delays on the job due to inclement weather. Quality control is also an added benefit. Modular homes are constructed in a controlled environment, with many design similarities. This leaves little room for error.
With the many risks of doing business these days, using off-site building options is proving to be a viable option.
7. Sustainable Development
Along with the introduction of technology into the world of construction, it appears that “going green” will be another construction industry trend.
This makes good sense, considering in order to build up, certain things must come down. Not only does the clearing of land and cutting down of trees affect the environment, but it also leads to increased natural resource consumption rates.
Enter, “green buildings”.
The construction industry is now considering ways to make buildings as environmentally efficient as possible. Green buildings are designed, built and disposed of with the purpose of minimizing their effect on the natural environment. We’ve already seen an increase in the production of high-performing buildings with energy-efficient features.
One can only hope that the future holds prosperity and continued growth for the field of construction and America’s economy. The construction industry trends outlined here are optimistic, but not without caution.