2020 marks the start of a new decade and with that comes plenty of change. With competition in the construction industry expected to increase in the coming years, construction companies need to be one step ahead to succeed. Looking forward, we review the top construction industry trends to watch out for in 2020 as well as how construction companies can prepare for them. Here we go!
Top 2020 construction industry trends to watch for
1. The rise of smart, connected cities
The Journal of Urban Technology defines smart cities as “high-tech intensive” urban developments that connect people, data and city elements to improve a city’s:
- Quality of life
As smart cities become more common, the nature of construction projects will, in turn, be more complex. From pedestrian detection sensors to WiFi-enabled lighting, smart cities will require construction companies to increase their technical know-how. In 2020, construction companies will need to re-evaluate the skills and equipment smart city development requires and will have to adjust strategies to accommodate this shift in how cities are built.
The way forward
The key to preparing for the rise of smart cities is education, as the more companies know about their construction, the better. Early investment in skills training is a great idea for those looking to own this niche and will pay off in the long-run as smart cities become the standard in urban development.
2. Increased pressure on the bottom line
Despite construction revenues increasing in 2019, net profits in the industry remain slim.
According to Deloitte, construction earnings before interest and tax (EBIT) account for 5.5% of a company’s sales, which leaves little wiggle room when it comes to unplanned expenses.
“On average, construction earnings before interest and tax (EBIT) account for only 5.5% of revenue.”Deloitte, 2019
To make matters worse, the cost of building materials such as concrete and brick is set to rise in the upcoming decade. With the price of goods steadily growing in 2020, construction companies need to look long and hard at business areas that can be optimized to drive a better bottom line.
“Construction companies need to look long and hard for ways to drive a better bottom line.”
The way forward
Whether it’s negotiating prices with suppliers or automating workflows, construction companies need to prioritize efficiency and cost-saving opportunities to succeed in 2020. To ensure profitability, they’ll need to consider how fluctuating materials costs will affect project budgets, quotes, and bids.
3. A declining workforce
As far as construction industry trends go, a shortage of workers is nothing new. While the demand for construction services has surged in recent years, the number of laborers has not. Since 2014, Deloitte has found construction job openings to increase by almost 50% while the number of new hires trails behind at an increase of only 14%.
The implications of this labor shortage pose significant risks to companies eager to take on new construction projects. Without the laborers needed to meet deadlines and execute flawless finishing touches, customer satisfaction becomes a huge challenge. For companies eager to garner repeat business it’s vital that crews have the laborers needed for seamless and precise execution.
The way forward
With the number of construction workers steadily declining, companies need to do more with fewer laborers. Supplementing your team’s efforts with more robust construction equipment or automation solutions is a sure-fire way to maximize their productivity.
Looking beyond 2020 construction industry trends
Our review of this year’s construction industry trends highlights the crucial role technology will play in the future of construction. Looking into this next decade, you can expect:
- Urban development to become more technically complex
- Construction expenses to increase
- Tools and technology to supplement a declining workforce
With many of these trends already in motion, it’s imperative that construction companies equip themselves with future-proof solutions. As we progress into 2020, we’re excited to see how the construction industry will evolve.