Let’s Talk Business – Good News
For most of this year we have been discussing the risks inherent in construction company growth during the boom market following the 2009 great recession. Now, ten years later, you might reasonably ask, “How are we doing? “Has the industry been able to navigate the choppy waters of growth? Where do we stand now? What comes next?”
Where We Stand
- For the year 2018 total (U.S.) construction put in place (CPIP) totaled $1.3 trillion.
- Researchers predict that theglobalconstruction marketwill be worth $10.3 trillion in 2020.
- 77%, $951 billion dollars, of U. S. construction spending occurred in the private sector in 2018. Most of this business was done by small to medium sized contractors.
- Multi-family residential construction rose by 7% last year, with $65 billion in estimated value.
- Commercial construction was $85 billion, up 11% from the previous year.
- 10.6 million people worked in the construction industry in 2017 (most recent data).
- 30% of the construction workforce identify themselves as Hispanic or Latino.
- The construction industry has added 297,000 net jobs in the past year.
- 57% of contractors plan on hiring more employees in the next 6 months.
- The average hourly wage of all construction employees was $29.95 (The current national minimum wage is $7.25).
- The median weekly earnings for a full-time, non-union worker was $840.
- The median earnings for a full-time union worker was $1,163 per week.
- 96% of U.S. general contractors are moderately confident in commercial construction demand.
- The average backlog of projects for general contractors is 9.3 months, indicating a stable market with room for growth.
So, I guess we could sum up our performance over the past ten years as quite remarkable. The construction industry has enjoyed a robust recovery and has had the most profound positive effect on the U.S. economy of any other sector.
Looking forward to 2020 and beyond, technological innovation will be the catalyst of insured growth in productivity and profitability.
Half, 54% of construction companies surveyed engage in some sort of R&D efforts for new technology. They are working to integrate and further develop the following technological innovations:
- Building Information Modeling (BIM) – a digital representation of physical and functional characteristics of a facility.
- BIM software allows engineers to essentially create a building on a computer before constructing it in the field.
- Last year saw a 12% growth in the number of construction firms using Building Information Modeling (BIM) software.
- There are various benefits to BIM tech in the construction industry from collaboration to cost and resource management.
- 82% of contractors agree that BIM is the future of project information.
- Project Management Software
- The software provides the construction industry with three fundamental advantages: efficiency, transparency and accountability.
- It enables data driven decision making in an industry where 95% of data was thrown away or not collected at all.
- VR and AR
- Virtual Reality can be effectively used to provide safety training to workers. It also enables easy communication and collaboration on site.
- Artificial Realityenhances what we see through data and information. This can provide accurate measurements, material details, and reduce the risk of errors.
- Use during the building process can accelerate repetitive tasks, utilize self-driven vehicles, and do masonry construction just to name a few tasks that robots already do.
- Drones– Already extensively used in…
- Mapping construction sites.
- Reporting the changes and updates of the project to clients.
- Monitoring and inspecting job sites.
- 37% of firms are currently experimenting with drones.
- Modular Construction
- According to Westchester Modular, through modular construction a job can be done 65 times faster.
These technological innovations will contribute to productivity, safety, and efficiency going forward. In future blogs, we will examine how to convert productivity, safety, and efficiency into profitability.
Read More: A Contractors Guide to Functional Analysis