The costs of energy and commodities immediately spiraled, ushering in the first sustained period of inflation in half a century.
This has been particularly challenging for the engineering and construction (E&C) sector, where, according to Deloitte1,
“Prices of construction inputs increased 40.5% between February 2020 and August 2022.”
Not only that, but the continued complications caused by the trade war between the U.S. and China have further undermined a global supply chain that had already been broken by the pandemic and its aftermath.
So where is the E&C industry today and what do construction companies have to do to keep ahead? In their “2023 Engineering and Construction Industry Outlook”1, Deloitte identifies five key market trends:
What are the 5 Biggest Trends for Engineering and Construction in 2023?
1. Market segmentation
On the one hand, the U.S. Congress has just passed a number of measures that will see a huge investment in infrastructure, as they try to encourage firms to build factories in the States instead of relying on offshore manufacturing plants in Asia. So firms operating in the nonresidential and commercial sectors are likely to become extremely busy, at least in the U.S.
On the other, the sudden rise in interest rates across the globe, together with the skilled labor shortage and the soaring costs of raw materials, all mean that residential markets are set to become significantly more subdued.
So firms are going to have to reorganize themselves around an industry operating at twin speeds.
2. Supply chain disruption
There were already supply chain issues because of the surge in demand for construction after the easing of the pandemic. But the war in Ukraine has made things considerably worse.
So E&C companies are having to re-think the way they do business, and how they’re structured. And there’s a conscious effort now to more carefully manage their supply chain, and to use available technologies to help them do so.
3. Future of work
What with the great resignation, the new hybrid way of working and the general dearth of skilled labor, E&C is particularly challenged when it comes to workers.
Deloitte suggests then that construction companies will have to pursue a policy based around two areas; becoming a purpose-driven organization (see 5 below), and offering workers a personalized career path.
4. Emerging technologies
E&C companies are, finally, turning to technology to increase efficiencies, reduce costs, expand business opportunities and boost profits. Using the likes of BIM, 3D modeling, digital twins, robotics and drones, which combine to facilitate prefabrication and modular construction.
But the easiest win comes from using software to streamline their internal structures. Because by far and away the biggest cause of cost and schedule overruns come from organizational inefficiencies.
5. ESG and sustainability
The continued rise of stakeholder capitalism means that companies have to pay as much attention to the environmental and ethical concerns of their customers and employees, as they do to the demands of their shareholders.
So firms are turning to technology so they can do what they do more efficiently. And to track and monitor the emissions they produce, and the improvements they’re making to reduce them.
It’s not enough to promise change, you have to be able to demonstrate that you’re actually delivering on those promises. And the only way to do that is by efficiently gathering and managing the data your activities generate.
Using the right software
Your ability to meet these challenges can be measured by how enthusiastically you embrace and implement digital transformation. As Deloitte conclude,
“With increased global supply chain disruptions, worker shortages and skyrocketing material prices, the need for digital transformation in construction has become much stronger.”
Yes, that means BIM, 3D modeling and prefabrication. But the easiest and most effective win of all comes from employing the right software, so you can track each and every stage of your project lifecycle, monitoring its costs and charting its progress.
There are lots of project management software solutions on the market but our complimentary Engineering and Construction Project Management Software guide outlines the three biggest benefits that Cora’s solution provides for the industry and what makes us stand out from the crowd.
1“2023 engineering and construction industry outlook” by Deloitte