Over the past 18 months, the COVID-19 pandemic has pushed the construction to reassess the way business is handled. As the demand for projects fell with the global economic downturn, contractors have needed to adopt technology and innovative solutions at a record rate to stay afloat.
Now, as the industry rebounds, we’re seeing that some innovations are here to stay and some new limitations to growth are popping up.
How the Pandemic Impacted Construction
When the COVID outbreak first started closing businesses in so many industries down, construction was declared an essential activity and continued. But the demand for projects dropped and the supply of materials and equipment became unreliable. By April 2020, 40% of commercial and institutional projects were delayed due to the pandemic. Though this rate improved, supply chain disruptions were an ongoing problem through the summer and fall.
Like many other industries, those working construction were forced to adjust during the pandemic. Let’s look at what some of those changes have been:
- Nearly 75% of both civil and commercial contractors said they changed their work environment and operations to allow social distancing and facilitate remote work for office staff.
- More engineers and contractors have adopted building-information modeling (BIM), drone devices, augmented and virtual reality, 4D and 5D simulation to increase accuracy, on-site safety, and to optimize project schedules.
- Construction companies worked to buildup an inventory materials that are critical or which have long lead times. They also started working with more suppliers to help stabilize their supply chain.
- More projects have been constructed, at least partially, off-site so that they could be managed more closely.
- Companies focused investments on technology to improve safety, efficiency, and project management.
“The pandemic has cut short the time it takes to adopt some of these trends to under one year, what would normally occur in a span of three years,” according to Construction Pros.
Post-Pandemic Recovery of the Construction Industry
Since business has been getting back to normal and the economy has started to rebound, the construction industry has seen a steep increase in demand. In recent months, commercial real estate sales has reached and exceeded pre-pandemic levels. Job sites that had been shutdown during 2020 and projects that were delayed are active again.
This boom has come as a relief to contractors and suppliers. Most are now working to rebuild their workforce and starting to accumulate a backlog of new projects which had been consumed during the lean months of 2020. In fact, by February of 2021, many construction operations were reporting backlogs only slightly below 2019 levels.
Contractors have been adding workers as they’ve been building up their backlog of new work, much of which they cannibalized in 2020 simply to stay in business. Indeed, overall backlog rose to 8.1 months in February, just 0.7 months shy of its pre-pandemic heights.
Roadblocks to Recovery
But it’s not all good news at this point. The construction industry isn’t fully able to enjoy the current building boom because of a few critical limitations.
1. Rising Price of Raw Materials
Anybody who is involved with construction is aware of the rising raw material prices these days. Construction material costs have risen so sharply in 2021 that the Associated General Contractors of America posted a Construction Inflation Alert highlighting the 12.8% jump in costs since before the pandemic began. High prices for steel, lumber, plywood and diesel fuel have squeezed profit margins and halted some projects as prices quoted months ago are no longer attainable.
2. Labor Shortage
As the downturn becomes an upturn for construction, crews need to hire more hands, but this is proving difficult in some areas. Workers are not coming back to jobs as quickly as the economy demands and the shortage of labor has pushed hourly wages up to record levels.
3. Transportation & Supply Disruptions
Another roadblock to construction growth are delays and disruptions in the supply chain. The transportation industry is struggling with heavy demand, a shortage of drivers, and high gas prices. This is currently impacting construction by causing delayed deliveries and unreliable supplies.
What’s on the Horizon for the Construction Industry?
So, what have we learned from this rollercoaster? The construction industry has not been quick to change in the past, but that won’t be true as we move forward. Surprisingly, many companies plan to retain some of the adaptations made during the pandemic. For example, 42% plan to make changes to safety and work procedures permanent and 35% will continue facilitating remote working where possible.
For contractors and crews to be successful in the future, they will need to innovate in some key ways:
- Greater adoption of technology that increases productivity and reduces waste, such as digital simulations, workflow management, progress tracking, and automated processes.
- Greater focus on the design and planning phases to limit the amount of raw materials wasted and decrease the number of man-hours needed.
- Greater use of mobile devices for better communication between construction crews and management and to avoid delays.
- Greater use of remote applications for inspections and accountability.
- Greater engagement with educational institutions, training providers, and labor unions to ensure new workers entering the construction industry have the skills needed.
Careful Planning and Project Management
Contact SoftDig for more information on how we can help keep your construction project on track.