5 Construction Industry Trends You Need To Know For 2017

With 2016 behind us, the construction industry is turning its attention to the year ahead. While construction spending failed to meet analyst expectations last year, economists predict 5% growth in the value of projects getting started in 2017, according to Dodge Data & Analytics. Despite that positive forecast, a feeling of uncertainty continues to loom over the industry. We spoke with experts from various sectors of the construction sector to find out their predictions of construction industry trends for 2017. While questions regarding what the incoming Trump administration means for construction dominated the conversation, they also described the new technologies, project delivery methods and workforce management trends they expect to shape the industry this year. 

Here are the top 5 Construction Industry Trends to watch in 2017: 

One of the construction industry trends that the industry hoped would fade away is, instead, raging on. The skilled labor shortage is a major concern for firms across the U.S. as trade contractors struggle to staff their job sites.

What’s the cause? Between April 2006 and January 2011, the construction industry eliminated more than 40% of its work force, cutting nearly 2.3 million jobs. Unfortunately, a significant portion of those workers haven’t returned. Much of the domestic construction workforce either pursued higher education, or found other, less-cyclical professions. Meanwhile much of the foreign-born construction workforce returned to their home countries. Many of them haven’t come back to America, thanks to improved economic conditions in their homeland–and tougher immigration enforcement. This has particularly hurt markets with disproportionately high immigrant populations, such as Texas and California, where roughly 40% of the construction workforce is foreign-born.

A lack of technical training in schools is also contributing to a smaller pool of workers entering the industry. Combined with an aging workforce, those factors are creating a struggle for construction firms seeking employees for positions ranging from skilled trades to managerial roles.

“If the economy stays strong and there’s continued investment in infrastructure, the labor shortage is here to stay,” says Dan Martin, economist for the Association of General Contractors. “The labor shortage will continue to be on the list of construction industry trends.”

Aside from the long-term implications of a dwindling labor pool, firms are feeling the immediate impacts of the worker shortage, as it can lead to higher costs and longer project schedules.

The shortages have harmed contractor’s abilities to both form their own workforces, and hire subcontractors, such as bricklayers and electricians. The net result, according to the 2016 survey, is that 75% of builders say they’ve had to pay higher wages and bids, 64% have delayed projects, and 68% have raised prices by more than 10%.

Ready to see this taken off the construction industry trends list? Filling this gap is going to take a concerted effort on all fronts, including encouraging America’s youth to return to the construction industry.

The days of design-bid-build domination might be winding down, as experts expect collaborative approaches, especially design-build, to become more common for projects. Design-build is one of the construction industry trends that is here to stay!

According to the Design-Build Institute of America (DBIA), an association founded in 1993 to promote single-source project delivery within the design and construction community, about 60 percent of all nonresidential construction projects in both the public and private sector now use this approach, in contrast to fewer than 10 percent two decades ago.

Simply put, design-build describes a method of project delivery in which the client holds only one contract with the entity that will design and build the structure in question. This is in contrast to the so-called traditional project delivery method known as “design-bid-build,” in which the client holds two contracts: the first with the design firm that conceptualizes the project, generates the construction documents, assists the client in procuring a builder, and advocates on behalf of the client to ensure that the project is built according to the drawings and specifications; the second is with the builder.

“Design-build is one of the construction industry trends that is increasingly popular in Texas and California, and is quickly becoming the norm throughout the country,” said Michael Vardaro, managing partner at Zetlin & De Chiara. “It allows more collaboration and gets you to the completed product much faster.”

Opportunities and involvement for architects in a design-build situation vary from state-to-state. The AIA’s first Code of Ethics, adopted in 1909, forbade its members from participating in design-build projects due to a perceived conflict of interest in protecting the owner while at the same time profiting from the construction labor and materials. In addition, federal and state procurement laws were based solely on the design-bid-build method and therefore did not permit the use of a combined design-build contract.

Due to various and complex forces, the fate of design-build began to shift in the latter half of the century. AIA adopted a new Code of Ethics in 1986 that no longer forbade design-build; the federal government has gradually come to embrace the process; and—according to G. William Quatman, FAIA, a licensed architect and attorney with the law firm of Shughart Thomson & Kilroy in Kansas City, Missouri—currently all but six states have laws that permit some level of design-build for public projects.

Design build is one of the most useful construction industry trends when a project is driven by cost and schedule and the project is well defined from the start by the client.

Last year was defined by uncertainty, as construction firms awaited the results of the presidential election. The next administration has the power to significantly alter regulations, taxes, labor policy and countless other aspects of business…giving them a huge impact on future construction industry trends.

With Donald Trump winning the election, many firms were cautiously optimistic about his construction and development  background, his promises to cut regulations and his massive infrastructure proposal. However, experts say the feeling of uncertainty hasn’t disappeared — and likely won’t in the months to come. That fear of the unknown could keep owners from starting or continuing new projects.

“I don’t know if anybody can predict what the new administration will really do,” said Gina Vitiello, construction attorney at Chamberlain Hrdlicka. “There’s a sense of uncertainty among contractors. If I’m planning on a major contract and it might not go forward, that’s a little scary. It’s hard to predict the next construction industry trends with the new administration.”

Some experts are concerned about possible trade conflicts with China and other countries — which could rock the U.S. economy and raise material prices — as well as the impact of stricter immigration policies on the construction labor force.

“I worry our industry is going to be so tied to the administration, which is not a status quo administration,” said Stuart Meurer, executive vice president and chief operating officer of Windover Construction. “I’m fearful of people’s reaction to it. I think it’ll curtail construction in 2018.”

Modular construction, sometimes referred to as off-site construction, is transforming the construction industry. Though it started out as a way to create temporary buildings, it has transformed into a common way of building permanent structures. Its promise of efficiencies makes it enticing to architects, specifiers and builders alike.

One of the more controversial construction industry trends, permanent modular construction is the process of building a module within a controlled setting and transporting it to a job site for assembly into a complete structure. This mode of construction can increase efficiency, consistency and sustainability while reducing common job-site delays, especially when the right materials are specified.

Offsite construction, also called modular or prefab, isn’t new to the construction industry. However, experts predict the building method will grow substantially in 2017 and 2018, as quality, time and labor concerns make alternatives to traditional construction methods more attractive. 

“There’s always an emphasis on condensing the construction schedule of a project and saving cost — two very important points in any development scenario,” John Atkins of the Association of General Contractors said. “Modular has the ability to suppress schedule. If you’re fabricating a module in a factory, sometimes it’s easier to maintain quality control. You don’t have to deal with weather.”

Reducing job-site delays is a major benefit of modular construction. Weather is often a major factor when jobs get pushed off schedule, as rain, strong winds and freezing temperatures impact installation time. With modular construction, since a majority of the construction process takes place in a factory, weather is no longer a risk factor.

Another common job-site concern is a potential lack of on-site storage. Oftentimes, the footprint of the structure is equal to the footprint of the land. This does not allow for storage of materials on site, making modular construction the only solution for the job. This quickens installation time, as the modules are shipped to the site and installed into their final position right off the truck.

It’s also possible to condense overall construction schedules with modular construction. Depending on the modular builder, modules can arrive on a job site up to 95% completed, ready for installation and final finishing. This is advantageous to construction crews, as it lessens the amount of work that takes place on the job site.

Drones, GoPro, RFID, Oculus Rift, augmented reality, 360 cameras, 3D laser scanners, GIS systems are all a part of a construction industry trend that is all the rage…not to mention super trendy for companies trying to attract younger employees. There’s no shortage of tech gadgets that are ripe for adoption on commercial construction projects, especially for the architects involved. Making these tech tools even more enticing for construction firms are the low barrier to entry—for example, professional-grade drones go for as low as $650—and improved integration with existing workflows and systems.

As contractors and subs continue their quest to cut costs and improve efficiencies, many are turning to technology to improve site operations, including equipment and employee tracking, wearables, drone surveying and other information collected on the job site.

“It’s been overwhelming at times just trying to get a handle on all the new innovations,” says James Barrett, VP and Chief Innovation Officer with Turner Construction. “It’s easy to get caught up in the coolness of these tools, but I feel like some of them are just a solution looking for a problem.” Turner takes an incremental approach to technology adoption, selecting the tools that offer the most favorable cost-to-benefit ratio.

In late 2013, Suffolk Construction formed a 12-person R&D team to help keep up with emerging technologies. The group, led by Senior Project Manager Jason Seaburg, has a formal process for testing new gadgets, including twice-monthly conference calls and timelines for testing.

“We work in an industry that, quite honestly, is a decade behind the times when it comes to technology,” says Seaburg. “We need to foster a culture and mindset where it’s OK to beta test all these new technologies hitting the market, and where it’s OK to fail. If a particular tool doesn’t work, that’s fine, we’ll move on to the next thing.”

Wearables, for instance, can track workers in the field and ensure that they protected from or at least aware of job site hazards and other potential injuries, and equipment sensors can monitor whether machinery is in need of repair.

Willy Schlacks, president at EquipmentShare, pointed to labor tracking as a major technology trend poised to take off in construction. “The amount of waste in labor mistakes or labor fraud is enormous in the construction industry,” he said. “The adoption of labor tracking technology has been so quick because there’s such a strong correlation to the bottom line.”

Harley said he believes the construction industry is still in the process of embracing new technologies, with a group of progressive contractors leading the way. Companies that  fail to keep up with the newest technologies risk getting left behind.