Changes in the construction industry and what it means for leaders

2018 marks a time of major change in the construction industry. Growth that has been steady since 2008 is starting to stagnate, modular houses are making new waves, and new regulations are planned to take effect. With these new changes come new challenges. Read below to find out how these changes are impacting the industry.

STALLED GROWTH & RISING COSTS

According to the American Institute of Architects (AIA) overall nonresidential building is expected to decrease from 3.8% to 3.6%. Commercial and industrial building is expected to drop from 8.8% to 4% and retail building is expected to drop from 10% all the way to 4.6%. This all equates to less opportunity in the construction industry. On top of this, the construction industry has been cursed with limited skilled labor for over 8 years now, and this obstacle is further augmented by rising costs in the supply chain. These trends are pushing contractors to reevaluate their current construction tactics and the technology they use to plan their projects.

MODULAR HOUSES BECOME AN ATTRACTIVE ALTERNATIVE

Modular houses are one way contractors are choosing to deal with the increase in supply costs and the decrease in skilled labor. Modular houses are built on assembly lines and reduce labor by 50%-60%. Allowing construction businesses to save and allocate resources elsewhere. Modular houses require less time to produce and, if necessary, can be designed to be disassembled and reassembled. Allowing contractors to save on shipping costs of raw materials and other resources.

NEW REGULATORY MEASURES WILL REQUIRE THE INDUSTRY TO ADAPT

New bills have been passed that will come into play during 2018. These include a “ban the box” legislation, and will allow employers to exclude criminal background checks from work applications. Allowing a greater number of workers to help solve the labor shortage. Other bills include the GOP tax bill from 2017 that will lower taxes for contractors. Growing P3 legislation will also be adopted in more states. Granting more partnerships between public and private companies.

New regulatory bills, modular houses, and stalled growth coupled with rising costs are all changes to the construction industry that organizational readers need to be aware of. These changes can have a massive impact on businesses and profitability. Don’t let these changes ruin your business.

With over 10 years’ experience and 278 customers across 19 industries, CEM has discovered an array of ways to help companies achieve a competitive edge in their respective industries. Learn how we can help organize your projects at CEM Construct.