In a recent meeting of the American Concrete Institute, Brian Moore of the FMI Institute stated that the future is changing and that there are three factors that will either make or break a construction company in the next ten years.
“These forces will come together to create significant disruption,” he says.
But while disruption poses risk and risk is always scary, he says that companies that are properly anticipating the trends can use this disruption to gain a competitive advantage.
Labor Still the Biggest Challenge
With unemployment at record lows, and a very shallow talent pool, it will be even harder in the future to find workers. Moore compares the construction industry to the manufacturing industry, where they have made significant financial investments in the last forty years to make a single worker much more productive—and construction hasn’t. Typically, a worker on a job site now isn’t any more efficient than a typical worker was decades ago. While some inroads have been made, Moore insists that this needs to be viewed as the game changer that it is: that we can’t simply wait for more workers to enter the field, but that we must move forward as though they’re not going to and invest in the proper technology and processes.
Moore offers three solutions:
1. Develop a bigger pool to draw from by banding together as an industry to attract more talent, or go at it alone and grow talent locally.
2. Beat the competitors by recruiting, hiring, onboarding, developing, managing performance, compensating and retaining better.
3. Change the math—More dollars per worker x a larger number of workers = greater output.
Megaprojects Will Shakeup Mid-Sized Firms
A recent study on project management from Oxford Business School says that megaprojects currently make up a whopping 8% of global GDP.
To meet demand for these projects, companies must switch from their project delivery method, to either “design-build construction” or prefabrication. Design-build construction cuts the middle man out of the contractor process: instead of an owner managing two contracts with the designer and the builder, the designer and the builder must work together from the beginning of the project.
“According to the 2018 Project Performance Review from The Charles Pankow Foundation and Construction Industry Institute, design-build projects ‘are delivered faster and with greater reliability in cost and schedule performance” compared to alternative delivery methods.’”
Prefabrication, on the other hand, is a well-known process, it just needs to be ramped up to a more competitive method. Whether it be in modular construction, or factory automation, prefabrication can make smaller firms compete with big firms by building more efficiently and profitably.
Construction Tech is the Present
Technology is going to invade the construction industry more in the next ten years than it has in the last fifty, according to Moore.
“We are taking a carbon-based workforce and augmenting it with a silicon-based one,” Moore says.
Venture capitalists also see the construction industry as one ripe for a digital transformation, investing nearly $1 billion in construction technology in the last year. This means that the prospect of construction technology is no longer science fiction; much of it already exits, and it is beginning to be deployed today.
“Our industry, our national economy is demanding it,” Moore adds.
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