2020 was quite the year. From the new normal COVID-19 brought to the materials shortages many contractors experienced, 2020 brought its fair share of challenges. Looking forward, here are the key construction industry trends 2021 will bring.
Here we go!
Key trends in the construction industry to watch for in 2021
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 sensors to WiFi-enabled lighting, smart cities will require construction companies to increase their technical know-how.
So in 2021, you will need to:
- Evaluate the skills and equipment smart city development requires
- Plan for this shift in how cities are built
How to overcome this key construction industry trend
The key to preparing for the rise of smart cities is education.
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 previous years, 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 — leaving 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.
With the price of goods increasing in 2021, construction companies need to look long and hard at 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.”
How to prepare for this key construction industry trend
Whether it’s negotiating prices with suppliers or automating sales workflows, construction companies need to prioritize efficiency and cost-saving opportunities to succeed.
To ensure profitability, you need to consider how fluctuating materials costs will affect your:
- Estimates and quotes
3. A declining workforce
As far as key trends in the construction industry 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 50% while the number of new hires trails behind at 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 challenge.
For companies eager to get repeat customers it’s vital that crews have the laborers needed for seamless execution.
How to handle this key construction industry trend
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 productivity.
Beyond 2021: Key trends in the construction industry to come
This review of key trends in the construction industry 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 complex
- Construction costs to increase
- Tools and technology to supplement a declining workforce
With many of these trends already in motion, construction companies must equip themselves with future-proof solutions.
As we progress through 2021, we’re excited to see how key trends in the construction industry will evolve.
See how a CRM solution can help you grow your construction business in 2021 and beyond.
Image credit: Yancy Min via Unsplash