Demand for construction continues to be high, with global construction spending predicted to increase from $13 trillion in 2023 to $22 trillion in 2040, according to a 2024 report from McKinsey & Company.
However, a recent construction survey from Quickbase found issues around labor shortages and unexpected supply chain snafus are making it harder to maximize profit on each project. In heavy civil construction, these challenges are more acute with delays and significant regulations adding complexity to project management.
With so much at stake when it comes to heavy civil construction projects, it’s important to stay on top of what is happening in the industry. Here is a closer look at the current state of the construction industry.
The Quickbase survey of more than 400 construction industry professionals and decision makers found the top obstacles in project delivery are supply chain disruptions, budget constraints, and labor shortages and skills gaps.
Digging deeper into the numbers, here’s how those issues are playing out.
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Unexpected Cost Increases
Ninety-five percent of survey respondents reported that over the past year, unexpected or increased costs have led to a project exceeding budget.
Impact of Labor Shortages
For 76 percent of survey participants, labor shortages are impacting their ability to win new work. Further, labor shortages impact the ability to complete work on time for 88 percent of construction professionals.
Closing the Labor Gap
Compared to a year ago, 75 percent of respondents say finding the right workers has not gotten easier; for 41 percent, it’s become harder.
Adding to this challenge is that fewer people are going into construction while previous generations are preparing for retirement. More than a quarter of companies surveyed reported an average annual employee turnover of 10 percent. It’s probably not surprising to learn that 82 percent of respondents are concerned about losing the institutional knowledge of more experienced workers.
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Manual Processes Slowing Down Projects
While the industry continues to undergo a digital transformation, manual processes are still widely used, especially on job sites. In fact, 91 percent of construction professionals still use paper for most of their tasks, with about half citing moderate paper use. Only 12 percent say they use fully automated software such as an enterprise resource planning (ERP) system.
In response to these challenges, contractors are investing more in digital tools. Yet there is a tipping point where those tools begin to undermine productivity.
Consider a classic scenario. Midway through a tunnel rebuilding project, the crew spots a structural failure. Fixing it requires additional supplies and engineers. From a project management perspective, the delay requires revamping the entire project plan from the midway point to the end. Getting a big-picture view of the project, staff, and supplies requires pulling data from a variety of sources because the details behind each element are often kept in a combination of paper forms, digital tools, and a project management platform.
Gathering those sources to recast the project timeline takes longer than you might think. A recent productivity survey found that employees spend 11 hours or more each week pulling information from multiple sources just to do their job. This lost productivity time is called Gray Work and is often the result of having disconnected digital tools and other data sources that create information silos.
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It may sound counterintuitive in today’s digital age, but fewer tools can lead to higher productivity. Productivity gains aren’t about cutting digital tools; rather, it’s about connecting digital tools to eliminate inefficiencies that lead to Gray Work, as well as inconsistent or inaccurate project data needed for decision making. Of note, a recent IT consolidation study found that 75 percent of respondents use more than 10 software applications in their daily work.
A connected work management platform streamlines project management and puts the contractor in a better position to determine which digital tools are most effective. With this understanding, it’s easier to introduce newer technologies such as artificial intelligence because you have the assurance that the underlying data is accurate.
For example, strategic contractors are now using generative AI to quickly get a big picture of a project’s status based on connected sources of information such as meeting minutes, inspection documents, progress photos, sensor data from the job site, scheduling updates, and real-time feedback from workers. They’re also taking advantage of AI to quickly convert spreadsheets into apps, and using AI-driven apps for pre-construction phases, project management, and boosting job site safety.
The next 12 to 16 months will continue to present challenges and opportunities in construction. Those challenges include accelerating digital transformation, streamlining digital tools, and preparing for the inevitable ubiquity of AI on the job site and in the office.
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Graphics courtesy of Quickbase.
