Construction industry looks ahead to the ‘new abnormal’ after pandemic

This year began with some high hopes in various industry sectors, including construction. No one anticipated a pandemic that would proliferate around the world, affecting more than three million people. We witnessed the deployment of drastic restrictions to reduce the spread of the virus that severely incapacitated many business sectors.

The construction industry has shown to be more unpredictable than the overall economy. Reduced economic activity results in less demand for new commercial or industrial facilities, and ambiguity further reduces investment. Loss of income and significantly decreased consumer confidence negatively affect demand for housing construction or renovations.

Disruption in the construction industry has been evident in recent years. The COVID-19 pandemic has greatly escalated those disruptions. A combination of increasingly rigorous sustainability requirements, rising cost pressure, labor scarcity, and new available materials, production approaches, and digital tools have forced the industry to innovate.

The disruptions demand strategic actions in focused areas. Some of those actions include:

• Increasing digitization. Construction firms are shifting to remote ways of working. For instance, designers and engineers are relying even more heavily on digital collaboration tools such as BIM (building-information modeling). Contractors are looking to online channels for monitoring their employees’ wellbeing through apps, ordering construction materials, managing scarce resources more accurately, and maintaining cash flow.

• Investing more in technology, digitization and innovation of building systems. The construction industry continues to see a shortage of skilled labor as it did prior to the pandemic. This shortage may be exacerbated by continued physical distancing, cross border movements and other restrictions on construction sites and offices.

• Increasing the volume of investment in off-site construction. Building in controlled environments has gained more attention because it is more strategic in today’s world that requires close management of the movement and interaction of various workforces related to construction projects. This rationale provides additional justification for off-site construction that goes beyond the existing benefits of quality and speed.

• Increasing investment in research and development to develop new and innovative standardized building systems to speed up and automate elements of design and construction. In addition, more investment is expected in automation of on-site and back-office processes.

• Rebalancing supply chains toward resilience as opposed to efficiency. Contractors are building inventory, securing critical materials and longlead items and vetting and identifying alternative suppliers.

• Accelerating achievement of sustainability with designs for healthier living with access to outdoor space, higher air quality standards and use of recycled and sustainable materials in construction.

Construction company leadership teams are re-evaluating, rethinking and revising their strategies and operating procedures to develop and implement aggressive initiatives to accelerate positive change to ensure success post pandemic.

“The reason why it is so difficult for existing firms to capitalize on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption.” Clayton Christensen, American academic and business consultant who developed the theory of “disruptive innovation.”