Key Trends in the Construction Industry That You Need to Know
From ongoing labor shortages and supply chain disruptions to technological advances, you can expect a few changes to the construction industry in 2023. However, the industry outlook remains relatively stable: The Associated Builders and Contractors recently noted its construction backlog indicator reached the highest level since early 2019. To help ensure that your construction company remains competitive, PeopleReady Skilled Trades highlights three key construction trends for the new year.
Trend #1: Ongoing inflation and supply chain considerations take shape
The construction forecast for 2023 calls for inflation and supply chain issues to remain critical factors. During the past year, rising inflation rates have spiked costs for lumber, steel, iron and other vital materials. While some prices have begun to stabilize, budget uncertainties remain heading into the new year. Meanwhile, lead times and shipping bottlenecks are expected to decrease slightly in 2023, but there will likely still be unexpected delays which can lead to higher final costs and prolonged timelines.
Adapting key business practices may help construction contractors position themselves for success in 2023. For example:
- Reviewing bidding strategies: Inflation and supply chain delays impact the schedule and final cost of projects, worsening your expenses and productivity levels. While construction contingency rates are usually between 5% and 10% of the project’s budget, the figure often varies depending on the size of the construction company and the project. Assessing your pricing model to ensure it accounts for higher costs and delays can help protect your profit margin.
- Altering contract terms: Contracts written before COVID-19 often don’t reflect modern concerns. As a result, many construction contractors are now negotiating for clauses covering changes in law, limitations on liability and notice of claim provisions with their partners, customers and stakeholders. According to Construction Dive, construction firms benefit from clauses limiting the financial impacts of inflation and supply chain delays.
- Changing supply chain policies: Construction contractors can reduce the risk of delays by working with multiple material suppliers. If bad weather or emergencies prevent timely delivery, other providers are ready to fulfill the order. Meanwhile, being close to your most commonly used suppliers allows for faster arrivals and long-term savings.
Trend #2: Technological advances can help enhance safety and productivity
Technology trends in the construction industry make for a promising future. Construction companies who don’t stay on top of these advancements will risk falling behind the competition. As the construction industry embraces digitization, construction contractors are adding a variety of new tools and resources. For example:
- 3-D printing: According to a recent study by Business Wire, the 3-D printing construction market will see an 87.3% growth rate over the next 10 years. The printers can create different structural items, including metal, concrete and composite, with materials and options continuing to grow.
- Internet of Things (IoT): Combining real-time data from GPS devices, wearable tracking technology and safety applications allows construction companies to measure the overall safety of your job site and perform data collection through drones, robots and laser scanning.
- Collision avoidance systems: Meanwhile, collision avoidance systems offer proximity alerts and blind spot coverage to help enhance the safety of equipment operators and those around them.
Trend #3: A growing labor shortage calls for expanded outreach efforts
One of the prevailing construction trends is the ongoing labor shortage. A recent Associated Builders and Contractors study found that 590,000 new skilled workers are needed to fill construction jobs in 2023. Here are two ways your business can flip the script to help tighten the growing workforce gap.
Expanding your outreach efforts: Diversify the candidate pool
A diverse workforce not only serves as a potential solution for the labor shortage but also helps construction companies grow. According to a McKinsey study, diverse companies are 35% more likely to have financial gains above annual industry averages. Further, diverse workforces have higher productivity, innovation and retention levels, benefiting your business in the short and long term. Construction contractors should consider expanding their outreach to groups that are underrepresented in the industry. For example:
- Women: According to the Bureau of Labor Statistics (BLS), 14% of construction workers are women, an all-time high. Given women’s growing interest in construction, they should also be part of your ongoing recruitment efforts.
- Military veterans: Vets currently make up about 7% of the construction workforce and each year approximately 200,000 vets transition out of the military. Military veterans have skills like leadership, organization and technical expertise that can easily translate into construction work.
- Minorities: In 2022, 93.8% of construction workers were male and 58.7% identify as white, according to the National Center for Construction Education and Research. Efforts to increase diversity will help construction employers build the workforces they need to sustain future growth.
Expanding your outreach efforts: Look to the next generation
Recruiting the next generation starts with understanding their unique preferences. Candidates for construction jobs desire schedule flexibility and autonomy in their work. Competitive wages that outpace inflation are also highly valued. And overall, Gen Zers desire jobs that offer upward mobility and opportunities for career growth. Other ways that you can promote the benefits of working with your firm include:
- Community involvement: A community-engaged construction company understands the importance of successfully completing projects and pushing their communities toward greater progress. Having an active presence in the community is key to developing relationships and recruiting new workers to the construction field.
- Local partnerships: Construction firms can consider partnering with community organizations and local schools and universities to attract young people to the industry and build their talent pipeline.
- Support from a staffing agency: A construction staffing agency has a large pool of pre-screened candidates across various roles. This way, construction companies will have a higher chance of finding the right fit for their specific needs.
HOW PEOPLEREADY SKILLED TRADES SUPPORTS YOUR CONSTRUCTION STAFFING NEEDS
Many other factors will affect the construction forecast for 2023. By partnering with PeopleReady Skilled Trades, you’ll be able to navigate the latest construction trends and succeed in the new year. That includes access to our construction staffing experts who help create a customized staffing plan based on local construction trends. We support your staffing needs whether you need a workforce for a single location or across multiple job sites.
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