Despite uncertainty, construction continues towards sustainable growth.
Throughout the first half of 2017 the construction industry has demonstrated stability in the face of adversity, with private construction investment leading the way. Amidst political and economic uncertainty and widespread fear of overbuilding, all indicators in the industry point towards continued sustainable growth.
Six months into the new presidency, many are surprised to find not much has changed in the construction world under the new administration. Discord and gridlock within political parties and shifting priorities on Capitol Hill have led to significantly less progress on public and government spending than many expected.
While spending on construction is up a sizeable 5.7 percent year-over-year, spending growth in the last three months remained relatively flat. The recent minimal growth is being driven by both the continued lack of qualified construction workers as well as a decline in infrastructure spending.
Materials costs have packed a few surprises of their own in 2017, with second quarter costs increasing by 4.4 percent year-over-year. While construction pipelines across the U.S. continue to drive steady demand for materials, cost increases in the first half of 2017 have largely been driven by political rhetoric around changing trade policy.
The three biggest industry challenges and the opportunities they present:
Challenge: Rising costs of materials. Over the last 12 years, materials costs have grown by nearly 30 percent.
Opportunity: Adopt technology and make more with less. With the advent of building information modeling (BIM), artificial intelligence (AI), modular construction and other technologies, developers and general contractors today can build with incredible efficiency.
Challenge: The ongoing labor shortage. Reaching historic lows, unemployment in the construction industry sits at 5.3 percent while hourly wages continue to grow and outpace inflation.
Opportunity: Increase productivity, embrace tech and rethink how the industry operates. Streamlining communications, workflows and document transfer between architects, engineers, project managers and others can help stakeholders do more with less manpower and quicker.
Challenge: The worries of overbuilding. After years of positive growth, many in and outside the industry are beginning to wonder – when’s the next slowdown, and what should you do about it?
Opportunity: It’s time to start planning. Anyone in the construction industry needs to create a contingency plan for if and when the economy begins to slow. While the plan shouldn’t go immediately in to effect today, having it close by is a necessity.