By Mads Schmidt Petersen

The pandemic saw the construction industry take its most brutal hit since the 2008 financial crash. The historic crash in Q2 of 2020 resulted in the sector constricting by 3.1 percent overall in 2020. Now that the storm has passed, it’s vital to outline its economic recovery. Although tech adoption has been slow in the industry, digital solutions, such as remote inspections and Computer Aided Design Tools (CAD), are the champions of post-pandemic growth. 

Things are already looking up. The construction market, of which 80 percent or more are roughly agreed to be small and medium-sized enterprises or businesses (SME or SMBs), is one of the most significant contributors to the world’s GDP, adding a weighty 0.73 percent globally. Despite still facing stresses from the effects of Covid’s long tail, many markets in the construction industry were able to recover to their pre-pandemic levels. While there may be future uncertainties still to face, trendlines indicate the U.S. market alone is expected to grow in 2022 by 3.7 percent compared to just in 2021. 

For the construction industry to reach the bright future that’s forecasted, SMBs must first confront some unique challenges. Improving tech adoption will be instrumental to innovation and keeping projects profitable. It will also be necessary to attract young talent to the SMBs that make up the foundation of the industry. 

There’s a lot at stake this year for SMBs looking to seize the opportunity for recovery. So, what are the key challenges for construction projects in 2022, and how to approach them?

1. Fragmented digital ecosystems 

There may be plenty of construction management software (CMS) options available (Procore, Autodesk or CMiC i) for the construction industry. Still, these are often costly platforms that are out-of-budget and ineffective at meeting the needs of the average SMB. As a result, fragile digital ecosystems pieced together from free apps and software (like WhatsApp and Google Drive) can leave projects vulnerable to data sprawl, inefficiencies, and disruptions. These costly mistakes and misunderstandings then eat into the company’s bottom line. 

As technology is becoming more affordable, tools that were previously only serving large enterprises are inching closer into the reach of smaller companies. ERP (Enterprise Resource Planning) systems are a type of large scale software, with modules for each department of a company. Each module is tailored to the needs of said department, but shares a common language with the other modules, allowing for easy collaboration and sharing of information. 

With this approach to construction project management software, information is not lost and automations are built to remove tedious and time consuming work from employees hands. When it comes to forecasting and decision making, leaders of organizations are then better placed to make informed decisions. 

2. Stagnating productivity levels  

Compared to other industries like agriculture and manufacturing, construction has been slow to innovate its tech side. The benefits of connectivity that technology can provide are integral to growth. So, while the construction market continues to outstrip the U.S. economy overall, better ERP and IT software explicitly designed for the needs of SMBs in the space will be critical to improving productivity. 

ERPs help small businesses and subcontractors to join easily on projects as multiple companies are able to work better and closer together and say yes to more projects. Full access to CMS systems can be costly in retraining staff and over complicated for IT departments. ERPs in comparison are an investment built to work with existing digital infrastructures, adapting to the specific form of each company that acquired it. With tailored digital tools in place, employers feel assured of their investment, maximize employee input, and boost industry-wide efficiency. 

3. Hybrid working 

Hybrid, agile, and remote working continue to be some of the biggest buzzwords in today’s world. Traditionally thought of as an in-person industry, construction has faced more challenges facilitating online working than any other field. Yet despite 52 percent of respondents never having field teams work remotely before the pandemic, 92 percent say they will continue. A further 95 percent of respondents credited technology as ‘critically important’ to making remote work possible. Learning how to evolve will be vital for the construction industry to not only grow – but flourish. 

Employees and employers both say they have seen the benefits of a combined in-person and remote working approach, not just for reducing travel time to and from sites. Remote viewings conducted with drones and mixed-reality headsets are just one suggestion for how tech might feature in the future of construction. Online working also brings opportunities to hire globally from an expanded talent pool that brings a broader range of skills and knowledge to projects. 

4. An aging workforce

Using technology and remote hiring practices to expand the talent pool for hiring managers is also a way for construction to overcome its challenge of an aging workforce. With nearly 40 percent of the construction workforce populated with employees aged 50 or over, compared to the 14 percent aged under 30, it’s clear the industry needs to work harder to attract its next generation of employees. 

Industry-wide slow tech adoption may have been exacerbated by having fewer digital natives from younger generations. Investments in upskilling existing workers and choosing low- or no-code solutions to digital infrastructures have been some of the practical ways around the difficulties faced so far. The situation certainly provides any savvy younger workforce members with an opportunity to leverage their native tech skills creatively for the industry. 

5. Challenging environments 

Artificial Intelligence (AI) developments have created new possibilities and changed how we use AI in the workplace. Over $2.5 billion is forecasted to be spent on AI for the construction market by 2030. Worksites equipped with sensors, cameras with detection and communication features, and other safety equipment like Internet of Things (IoT) devices already improve on-site safety and reduce employee health risks and fatalities. 

Designing for challenging environments is another area AI has been enabling exciting developments. Whether thinking about affordable housing solutions for large numbers of people or planning a supertall for New York’s Billionaires’ Row, each project comes with its issues. AI will make infrastructure delivery more economically efficient by optimizing the design and modeling stages of projects, creating 3D maps, conducting proposed site surveys, and gathering information for plans faster. 

Increasing tech adoption will make the industry more competitive, so companies can future-proof by reviewing their software options and IT architectures. Although overall tech adoption in the industry has been previously slow, the pandemic has spurred a wave of new tools and resources available to construction SMBs. Investigating tools like ERP systems made for smaller and medium-sized companies is the best way for businesses to start their digital transformations – if they haven’t already.


Mads Schmidt Petersen is CEO and Co-founder of Hippo.Build.

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