The first half of 2017 is nearly behind us and has been marked with news and reports of mixed results from the construction industry. This stop and go motion is a result of subdued optimism meets feelings of uncertainty, is driven by a number of factors that will make us vouch anxiously over what the industry will hold for its stakeholders in the latter part of 2017.
Despite lackluster growth figures in 2016, industry analysts predicted a mature growth sector rate of 5% in 2017. They also anticipate that the construction industry will make a strong rebound due to high-value energy and infrastructure growth-laden projects like the highly controversial Dakota Access Pipeline, worth $3.8 billion, that will likely go through in the latter half of 2017.
Here are 5 key trends that will affect the construction industry in the second half of 2017:
Labor Shortages will continue to impede growth:
While growth rates remain optimistic for the industry, the required quality and quantity of labor to service those very growth rates will continue to remain a huge cause of concern for the sector as the year enters its second phase.
Industry groups have repeatedly voiced their concerns over how this problem could get serious in the years to come as the younger generation or the millennial pool is not attracted towards a role on the construction site and is seemingly more interested in making its mark in the tech or other “future led jobs”. Other problems such as the low number of women employed in the sector and the general perception of how construction jobs are not a “long term” career path, are unlikely to go away anytime soon. These issues will need a relook at the policies and recruitment strategies that the industry currently has in place.
The Trump Trillion plan could set the pace:
In a meeting with manufacturers on March 31, 2017, President Donald Trump provided reassurance that the proposed top heavy infrastructure plans are definitely going to happen. The decade-long plan proposed by the President would see infrastructure projects to the tune of a trillion dollars, providing hundreds of thousands of immediate jobs and growth for the construction sector.
The current administration seems quite optimistic on its plans in the large scale infrastructure projects but is currently mired in the process of shortening the permitting process, which, at the moment, appears quite lengthy. The Administration is looking for ways to streamline the process of acquiring legal approvals for shovel ready projects as well as ways to make the permit acquisition process much easier. One of the main reasons for slow and negative growth in the previous years was due to this very problem, as large scale projects like The Chokecherry and Sierra Madre wind projects failed to take off without adding tens of millions of dollars towards construction costs even before breaking ground.
Creating more certainty in the process would pave the way for future and current projects under consideration, to be pursued in a timely and cost effective manner. President Trump’s intent to get Congress on his side in this matter would be one of the most important accomplishments for the construction industry this year.
Hike in Material Prices and Labor shortage to crucially affect construction costs:
The cost of many important construction materials witnessed a double-digit price increase for the month of March 2017, according to price data figures released by Associated General Contractors of America. This resounding hike in prices is due in to the restrictions being placed on important imported materials like Canadian sourced lumber as the current administration focuses on promoting locally manufactured and procured goods.
Average hourly earnings witnessed a 2.4 increase in the period between March 2016 – March 2017 and keeping in view the issue of labor shortages, the industry might be forced to delve out even more in compensation and benefits to retain the current workforce pool, making it highly difficult to keep construction costs in check for the last six months of this year and beyond.
VR/AR to become a significant player in next Gen projects:
The new headquarters for microchip maker NVIDIA, located in Santa Clara, California, was designed by Gensler, but what’s more important is that this unique building had a crucial piece of technology helming the architectural design process that made it go through in a much more plausible manner. Virtual or Augmented Reality is all set to move forward after helping the designers of this project in a demonstration of its usefullness as a readily deployable tool in augmenting the design process.
When NVIDIA wanted to make sure that the light quality inside the workplace is optimized, the VR came into play as traditional renderings would only have been able to serve varying color light intensities, but the VR showed the intensity of light and its character to make the engineers realize that they could get the same results with fewer skylights than that they had initially proposed.
VR/AR hold vast untapped potential and will not just serve as a fancy headgear the engineers get to play with but could become a crucial component in cost reduction strategies and bettering the design process. One of the more stable bets for the next phase of 2017, definitely.
The sustainable construction sector might need a PR revamp:
With the current administration vouching for job growth and plans of shelving the Environmental Planning Agency in lieu of it, the importance of climate change and its message might lose a bit of a steam in the times to come and could also make the green construction industry slow-down.
President Trump didn’t mention climate change in his message on the occasion of Earth Day 2017, which many have seen as a sign of how he and his administration will approach things to come. The green construction industry in the United States could also see many of its projects go to risk if the administration continues with its current stance on the climate change issue.
If sustained growth for the sector is the motive ahead, the industry groups might need to rescind how they portray their projects to consumers now. This sector would be in a much better situation if it focuses upon promoting the bottom line results that green construction could provide rather than sticking to their old marketing strategies. The new message might be increasingly important and the growth of this sector could hinge on a successful revamp. From the implications of climate control to the efficiency of high-performance buildings, a new norm might come across as we enter the next phase.