The new year is upon us and as construction companies get ready for the coming season, it’s important to look back over the past year, and look forward to the new, to get prepared for the upcoming trends. 2019 was a year of ups and downs for the industry, and many companies who carefully planned for the current rapid changes found that they were able to thrive in the current conditions. What outlook can you expect in the construction industry for 2020?
Many of the trends and outlooks that applied to last year will continue through this year. By paying close attention to where the industry is, and where it’s going, you can position yourself to succeed and even grow as we move into the next few months. Let’s check out an overview and construction industry outlook for 2020, the trends and innovations you can expect and how you can position yourself for success.
Economic Outlook
2019 saw a slowdown in the overall global economy, and while the construction industry remained stable, it did leave some wondering what the 2020 year would bring. The good news is that the U.S. economy continues to expand with strong consumer confidence and a good labor market overall. The GDP for the United States is expected to continue to see average growth in the long run.
There has been a slight decline in industrial production which could potentially mean a slowdown in the construction industry. Manufacturers are also concerned about an economic downturn on the horizon due to how long the economy has expanded. It’s a good sign, however, that income and wages have increased of late.
Construction Industry Outlook 2020
It’s likely that the construction sector will continue to see solid and reliable growth over the next year. Experts are looking at a potential growth of 3.3% this coming year, and continued growth of up to 2% per year over the next five years.
The strongest sector for construction will likely continue to be residential construction, even though it has seen a slowdown recently.
If there are concerns about the construction industry, they come from materials availability which could be affected by tariffs, and by the need for a nationwide package to deal with infrastructure issues. Still, the overall outlook remains very strong, and that’s good news for construction companies.
Deloitte predicts that the revenue of construction across the globe by 2025 will reach $15 trillion. It’s expected that this year and over each of the next few years, it will expand by roughly 3.6%. Over 4% of the gross domestic product (GDP) will be invested in infrastructure through 2035. This is a solidly positive prediction for the industry in the years ahead.
Not All Positive
Not every analyst sees continued positive growth. There are those who see potential slippage in specific segments by as much as 6% in residential and up to 3% in infrastructure, roadwork and construction that doesn’t involve buildings. In terms of residential construction, these analysts cite rising property values and reduced affordability for those looking to become first-time homebuyers, while multi-family units are expected to remain stable or slightly drop as well.
Even these analysts, however, admit the outlook points to growth in certain sectors of the construction industry in 2020, feeling that industrial construction will remain stable, and public works is expected to have as much as 4% growth. So even among those who are issuing warnings, there is still room for growth.
Challenges to Be Overcome
Some of the biggest challenges facing the industry as we turn the page on a new year are continued pressure on company bottom lines, labor shortages and difficulty attracting and maintaining the best talent from a millennial generation that is shying away from construction work, and a changing approach to contract bids which is requiring a change in the overall approach that requires better adoption of digital technologies.
Taking Advantage of Opportunities
Every year is one of ups and downs, and no analyst can predict with 100% accuracy where things will go. The key to growth this year is for construction companies to know how to take advantage of the opportunities that arise. If nothing else, 2020 promises to be a very dynamic year with a number of ongoing trends still to play out.
There are a number of sectors to watch for this coming year. To continue to grow and compete in a tightening industry, you will need to redefine your overall vision and adapt to the new trends in business demanding that you stay ahead in technology and innovation. This means building a new network of contacts and partnerships that enable you to stay ahead of the innovation curve.
Digitally Transforming the Industry
As more and more people move into urban areas, digital initiatives become ever more important. In fact, according to the United Nations, it’s estimated that 68% of the world’s population will live in urban areas within the next three decades. The trend towards green and sustainable buildings is a real thing and it’s not going anywhere. Smart technologies are leading to greater sustainable living in urban communities. As construction companies take a larger role in developing urban centers, they will need to apply digital capabilities to create this sort of sustainable ecosystem.
Adapting to the digital world means implementing core changes in how you work. You’ll need to encourage and embrace innovation, and encourage your workers to be digitally minded. Look at the future of the industry as a long game, and don’t be afraid to experiment in small ways, then grow your use of technology. The more you can adapt to and embrace technology, the better able you’ll be to draw the best workers and overcome the predicted labor shortage in 2020. You’ll need leaders who have a futurist mindset and vision to make things work for you.
Digital Technology and the Future of Construction
For years, the signs have been on the horizon: embrace the use of digital technology or be left behind. This message is now clearer and more important than ever, and the construction industry outlook for 2020 indicates that technologies from robotics to augmented reality will shape the direction of things in fundamental ways. Technology has impacted the sector in ways that even the most foresighted analysts couldn’t have seen, and the construction outlook for 2020 will see even more potential breakthroughs in everything from efficiency to safety.
If you have not yet adopted robotics, drones and artificial intelligence into your business, now is the time. These technologies allow you to better communicate with partners and clients. They allow you to improve safety by inspecting potentially dangerous areas without placing people at risk. They allow for 3D modeling and mapping of sites and projects before construction even begins.
They allow you to track every aspect of a project from inception through to completion. With the right AI software package you can track incoming and outgoing payments, inventory, materials and supplies, and progress of multiple teams at various stages, including contractors and subcontractors. They vastly improve efficiency while at the same time saving a lot of money on costs.
Let’s look at some of the technologies that will become ever more important in the 2020 year and beyond, why these are reshaping the industry in such fundamental ways, and why you should adopt them if you haven’t already.
Project Management
Digital technology is transforming the construction industry, and there’s no changing that. Software that allows for real-time communication and project management is creating greater efficiency and reducing the amount of paperwork involved in a given project. This software even allows for communication and collaboration across platforms, whether you use Apple, Windows, Android or another platform that you and your staff, partners, clients and contractors prefer.
Using Drones and Robots
The use of drones has actually become standard in the construction industry. They are cost-effective and precise, and they allow you to get a full view of any given site or location, even having the ability to penetrate areas that human beings can’t. You can now complete surveys of sites in just a fraction of the time that it once took. They can produce real-time images, create 3D modeling, even mapping the topography of sites, and their utility will only increase as time goes on.
Drones are only one type of robotics that are used in construction, and as time goes on, robots will fill an even greater role in the industry. From bricklaying to moving earth, robots can not only increase the speed, accuracy and efficiency of construction, they can also help with issues of safety. Robots can function in areas that are unhealthy to humans, from areas of very high or low temperatures to those where toxic chemicals are present.
The future is even likely to include what are popularly known as nano-bots, or tiny robots that work together using a sort of hive-mind network to quickly and efficiently assemble objects and work in areas that humans physically can’t reach. This isn’t something that’s available now, but it is being explored and it’s likely part of the future of construction.
Augmented and Virtual Reality
AR and VR technology have been experimented with for a number of years in the industry. Usually, it’s applied to 3D modeling which lets you explore a building before construction begins or as it progresses, so you can see any issues and correct them before they become a problem. These technologies are also being used to replace paper blueprints and even to augment and replace CAD. They allow you to directly interact with a virtual environment to provide insights that just 10 years ago were not available.
Another important aspect of VR and AR in the construction industry is that it is being used in training. You can teach staff and contractors how to use specialized equipment without subjecting them to dangerous situations. You can provide safety briefings and put people through role-playing scenarios that allow them to learn how to react to situations regarding safety in a controlled environment where no one is put in actual danger.
Data-Based Design
As technology increases, some architects and building engineers are finding they are able to design entire structures based on data alone. This was not possible a decade ago, but structures like the Marina Bay Sands hotel’s Sky Park in Singapore have been made possible through data collection, analysis and testing, this structure stands today and thousands of people enjoy it every year.
3D Printing and New Materials
Especially as tariffs become a question mark in the industry, 3D-printing technology is allowing for the sourcing of parts in a more efficient way than ever before. More construction companies every day are adopting 3D printed parts, materials and even tools to bolster their projects. There have even been complete buildings erected from 3D printed parts.
There are also new materials being developed that are improving construction every day. Even concrete is not immune — we now have a self-healing form of concrete that can use bacteria to create limestone that fills in cracks and crevices that develop through damage, wear and tear, to keep it solid and stable for much longer than ever before.
Building New Approaches and Partnerships
In 2020, we may well see initiatives to upgrade infrastructure that are sorely needed. The U.S. is facing issues with crumbling bridges, lead and contaminants in water, and deteriorating roadways which are increasingly congested with traffic. These are issues that have to be addressed and quickly, and they present major opportunities to construction companies. In fact, correcting the infrastructure is a potentially $2 trillion market that can expand over a decade. It represents some of the largest infrastructure spending in the history of the nation.
This is going to require a lot more than just federal expenditures; private investments will also be required. If you can build partnerships with the right private sector companies, this can lead to broad opportunities. In 2020 alone, the federal government is allocating $200 billion towards infrastructure. When combined with a sustainable approach to building via new approaches and new green building materials, there’s a lot to look forward to, and a lot to take advantage of.
Looking Beyond 2020
The likely outlook for the U.S. construction industry is to see modest growth in 2020, which is a good sign overall, as areas such as the Middle East and Europe are expected to see a downturn. The industry in the U.S. will continue to build momentum as investments in the nation’s infrastructure come to fruition. The loss of momentum in the residential housing market will be more than made up for in these infrastructure projects.
National Surety Services Inc.
Of course, in order to be competitive in the construction industry, you’ll need to have the right surety partner. National Surety Services Inc. is a national surety bonding agency that is here to provide efficient, fast and reliable bonding services to construction companies of all types. If you’d like more information on the state of the industry, be sure to check out our ongoing series of articles on issues and trends affecting construction.
To get your company bonded and compete at the highest levels, check out our forms and application packages which cover everything from contractors’ applications to sample bid payment performance forms, license and permit bond applications, bank letters, and even special application packages for SBA bonds that allow small companies to bid against major jobs, a key factor in growth. These application packages and sample forms have everything you need to get up and running in a flash.
If you have any questions or would like more information, feel free to drop us an email or give us a call to get in touch with us today. We’ll be glad to walk you through everything you need to know.