No industry was spared from the effects of the global pandemic, but one that was especially hit hard was the construction industry, with rippling effects still being felt today. Rising costs such as material, labor, fuel, and maintenance have severely impacted the bottom line of contractors and subcontractors. Continued construction material inflation, the scarcity of skilled labor, and material lead delays remain significant roadblocks to success. Yet, despite these mounting challenges, construction professionals have overcome many difficulties, and they continue to see hope for the future, anticipating further growth and more extensive projects in 2023.
While many construction companies have already begun incorporating technology as a tool into their belt, many still need to catch up to adopt the changes. This is not necessarily surprising, as the construction industry has historically been among the slowest to adopt new technology, with the ongoing use of whiteboards, spreadsheets, paper-based processes, and other “old school” practices—instead of construction tech platforms. However, these methods of job tracking are not feasible and will not work in this swiftly evolving industry.
TECH FOR IMPROVEMENT
To better weather current and future economic ups and downs, construction professionals must focus on solving what is within their control, and technology is helping them to do just that. General contractors and subcontractors increasingly rely on digital solutions that streamline efficiencies, increase collaboration, and improve margins through greater productivity.
To better understand the obstacles construction professionals confront each day and technology’s role in the industry, Planhub reviewed the internal platform activity of 26,000 contractors and more than 250,000 subcontractors, and ran a special survey of 465 respondents to examine their most significant challenges in 2022, their outlook for 2023, and more. All the respondents were selected for their longevity and broad experience in the industry.
The results of the research were presented in a State of the Industry report, which provided great insight:
- Confidence for 2023: 82% of general contractors and 80% of subcontractors plan to grow their business this year.
- Increased bid activity: General contractors increased their invitations to bid (ITBs) by 35%.
- Adopting technology: Since the beginning of 2021, a 324% increase was seen in the number of general contractors posting their first projects, and projects with strong activity increased by 231%.
- Expanding opportunities: Subcontractors have responded to adversity by seeking new ways to find business. Subcontractors expanded their reach by listing up to 20% more trades in which they worked and expanded their service area by nearly 50%.
According to a McKinsey report, the impacts of the COVID-19 pandemic have prompted new construction technology innovation and accelerated its adoption. Investment in construction technology increased by $25 billion between 2014 and 2019 and increased by an additional $4.5 billion in 2021. Instead of combing through old bidding documents, Post-It notes, and spreadsheets, contractors, and subcontractors need innovative tools that streamline their operations and generate more revenue.
Hundreds of thousands of general contractors and subcontractors already count on our construction planning and management solutions every day. It has reduced their manual workloads, increased accuracy and efficiency, sped up bidding and takeoff processes, enhanced visibility, more effectively tracked assets, increased collaboration, and expanded networking to manage businesses better and build success. It digitizes all the essential information contractors and subcontractors use most frequently, providing streamlined bidding, instant and straightforward document replication, and other critical business processes while saving time and money.
DEFEATING INFLATION
The price of construction materials can be as much as 60% of the overall construction cost. Much of this comes from the more than 35% increase in critical materials since the beginning of the pandemic. During the last 3 years, this record inflation has raised the cost of construction projects exponentially while also creating new risk management challenges for contractors. Though significant barriers remain, many of the supply chain bottlenecks that hindered business have begun to ease. However, while some prices have fallen, contractors and subs continue to deal with severe material cost challenges. Going all in on the digital revolution will enable contractors and subcontractors to boost efficiencies, alleviate rising inflation and save money to meet the goals set for 2023.
LOCKING IN LABOR
It is estimated that the construction industry will need to hire 590,000 additional workers in 2023—on top of maintaining the average hiring pace. Newer generations aren’t as attracted to the field of work as it once was, and along with the rising silver wave of retirements, the talent pool is beginning to dry up. With that in mind, the construction industry must lean into innovative technology to be attractive to talent and to match the skills and knowledge the younger generation has learned coming out of school and other vocational programs.
Construction companies can no longer use a scale ruler and highlighter for material take-offs if they want to attract estimators who are used to performing take-offs electronically. By leveraging digital solutions like comprehensive construction planning and management technology, contractors and subcontractors will be better prepared for any challenges ahead by improving critical business functions and collaboration relationships, which will help construction professionals to prosper.
CLOSING THOUGHT
These new digital solutions will also enable all parties to streamline efficiencies and improve profit margins through enhanced productivity. It is a solution that will continue to provide valuable tools that simplify work at every step, nourish a thriving community for all construction professionals, and do so with a firm commitment to provide personal assistance and support throughout any challenges ahead.
About the Author:
Ro Bhatia is the CEO of PlanHub, the leading cloud-based preconstruction platform that enables general contractors, subcontractors, and suppliers to connect and collaborate on construction projects across the US. PlanHub was created by contractors, for contractors, to simplify the construction bidding process. For more, visit planhub.com.
Modern Contractor Solutions, March 2023
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