The construction industry started 2023 with a 7% increase in nominal value added and 6% in nominal gross output, largely driven by inflation rather than volume growth. Challenges include labor shortages, high material costs, and rising interest rates. However, 2024 may bring growth, particularly in infrastructure and clean energy, thanks to funding from recent legislation. Sustainability remains a key focus, with the industry adopting greener practices and materials to meet regulatory demands. Technology adoption, including generative AI and digital tools, is expected to enhance efficiency and project delivery. Despite market uncertainties, construction firms are likely to pursue mergers and acquisitions to adapt and grow. The labor gap persists, with a need for skilled workers, leading firms to seek diverse talent sources. Overall, agility and innovation will be crucial for E&C companies to navigate economic challenges and capitalize on growth opportunities.
| name | description | change | 10-year | driving-force | relevancy |
|---|---|---|---|---|---|
| Labor Shortage in Construction | The ongoing shortage of skilled labor is a significant challenge for the construction industry. | From a stable labor market to a situation where qualified workers are scarce, impacting project completion. | In ten years, the construction workforce may become increasingly reliant on technology and automation due to labor shortages. | Rising wages and a shift in worker preferences towards less physically demanding jobs are driving this change. | 5 |
| Rise of Sustainable Construction Practices | Sustainability is becoming essential for construction firms as they adapt to regulations and customer demands. | From traditional construction methods to a focus on sustainable materials and practices in building design. | In ten years, sustainable construction could dominate the industry, with all new buildings built to net-zero standards. | Government incentives and regulations for sustainable practices are propelling this shift in construction methods. | 4 |
| Adoption of Generative AI in Construction | Generative AI is emerging as a powerful tool for enhancing construction project design and efficiency. | From limited technological integration to widespread use of AI for project planning and execution. | In ten years, AI may fully automate many aspects of construction management and design, improving efficiency. | The need for improved efficiency and cost control in construction is driving the adoption of AI technologies. | 4 |
| Increased Mergers and Acquisitions | There is a notable rise in M&A activity within the construction industry as firms seek strategic growth. | From a competitive, fragmented market to one where consolidation is common for accessing new markets. | In ten years, a few large firms may dominate the construction market due to ongoing consolidation trends. | Economic uncertainty and the pursuit of cost efficiency are motivating firms to merge or acquire others. | 4 |
| Focus on Resilient Design | The construction industry is increasingly prioritizing designs that withstand severe weather events. | From standard building designs to an emphasis on resilience against climate-related challenges. | In ten years, most buildings may be designed to endure extreme weather, reflecting climate adaptation strategies. | The increasing frequency of severe weather events is pushing designers to incorporate resilience into building plans. | 5 |
| Shift to Digital Technologies | The construction industry is gradually adopting more digital technologies for process improvement. | From traditional methods to the integration of digital tools for better project management and design. | In ten years, digital technologies may fully integrate into construction processes, enhancing overall productivity. | The need for efficiency and cost control in construction is driving the push towards digital transformation. | 4 |
| Increased Government Investment in Infrastructure | Legislation is channeling significant funds into construction for infrastructure and clean energy projects. | From limited government support to a surge in funding for critical infrastructure projects. | In ten years, infrastructure quality may significantly improve due to sustained government investment in construction. | Government initiatives aimed at revitalizing the economy and transitioning to clean energy are fueling this investment. | 5 |
| name | description | relevancy |
|---|---|---|
| Skill Shortage in Construction | The ongoing shortage of skilled labor threatens project timelines and industry growth as companies struggle to fill open positions. | 5 |
| Volatility in Material Prices | Fluctuations in the prices of construction materials can complicate project planning and impact profitability, hindering growth opportunities. | 4 |
| Economic Uncertainty and Interest Rates | Tightening monetary policy and high-interest rates may trigger an economic downturn, negatively affecting the construction market. | 5 |
| Sustainability vs Cost Efficiency | Balancing sustainable construction practices with cost efficiency poses a challenge, as green initiatives may incur higher upfront costs. | 4 |
| Cybersecurity Risks with Emerging Technologies | The adoption of generative AI and other technologies raises concerns about cyber risks and data security within the construction sector. | 4 |
| Aging Workforce in Construction | The substantial number of retiring workers combined with a lack of younger skilled labor could lead to a significant talent gap. | 5 |
| Market Segmentation and Demand Fluctuations | Variations in demand between residential and nonresidential segments may lead to unequal growth and sustainability issues across the industry. | 4 |
| Environmental Regulations and Compliance | Evolving environmental regulations create challenges for construction firms in meeting customer demands for greener buildings while controlling costs. | 4 |
| name | description | relevancy |
|---|---|---|
| Sustainability as a Business Imperative | E&C companies are prioritizing sustainability to meet market trends, regulations, and customer demand for greener buildings while managing costs. | 5 |
| Adoption of Advanced Materials | The industry is increasingly utilizing advanced materials like self-healing concrete and eco-friendly composites to enhance durability and reduce environmental impact. | 4 |
| Integration of Generative AI | Construction firms are exploring generative AI for project design, optimization, and efficiency improvements, marking a significant digital transformation. | 5 |
| Early Incorporation of Sustainable Design | E&C companies are prioritizing sustainable design tactics during the conceptual phase to significantly lower carbon emissions and costs. | 5 |
| Focus on Resilience in Design | There is a heightened interest in resilient design approaches to address challenges posed by severe weather events and market demands. | 4 |
| Shift Towards Circular Economy Principles | Companies are engaging in reusing materials and designing structures for disassembly to minimize waste and support sustainability. | 4 |
| Strategic Workforce Development | Firms are adapting their recruitment strategies to address labor shortages by targeting diverse and younger talent pools. | 5 |
| Mergers and Acquisitions for Strategic Growth | In response to economic uncertainties, E&C companies are increasing M&A activity to access new markets and enhance resilience. | 4 |
| Utilization of Digital Technologies | The adoption of digital technologies like BIM and IoT is improving process efficiencies and project delivery across the construction sector. | 5 |
| Focus on Cost Management Strategies | E&C firms are prioritizing strategies to manage cost volatility and fluctuating labor and material prices to maintain profitability. | 5 |
| description | relevancy | src |
|---|---|---|
| Innovative materials like self-healing concrete and eco-friendly composites to enhance durability and reduce carbon footprint in construction. | 5 | c1f03407e92d82ff6f8e3bc04f8996c2 |
| A subset of AI that generates new content, enhancing design, efficiency, and cost control in construction projects. | 5 | c1f03407e92d82ff6f8e3bc04f8996c2 |
| A digital representation of physical and functional characteristics of a facility, improving project delivery and efficiency. | 5 | c1f03407e92d82ff6f8e3bc04f8996c2 |
| Unmanned aerial vehicles used for site inspections, monitoring, and optimizing construction tasks. | 4 | c1f03407e92d82ff6f8e3bc04f8996c2 |
| Self-operating vehicles that assist in material delivery and surveying on construction sites. | 4 | c1f03407e92d82ff6f8e3bc04f8996c2 |
| Internet-connected sensors for real-time data collection and analysis to improve building performance and reduce emissions. | 4 | c1f03407e92d82ff6f8e3bc04f8996c2 |
| Advanced analytics techniques applied to construction data for better decision-making and operational efficiency. | 4 | c1f03407e92d82ff6f8e3bc04f8996c2 |
| Strategies aimed at maximizing energy efficiency in buildings, contributing to sustainability goals. | 5 | c1f03407e92d82ff6f8e3bc04f8996c2 |
| Architectural strategies that reduce energy use through building orientation and material selection. | 4 | c1f03407e92d82ff6f8e3bc04f8996c2 |
| Approaches focusing on reusing materials and designing for disassembly to minimize waste. | 5 | c1f03407e92d82ff6f8e3bc04f8996c2 |
| name | description | relevancy |
|---|---|---|
| Sustainability in Construction | The construction industry must adapt to sustainability demands, balancing environmental regulations and customer expectations while managing costs. | 5 |
| Labor Shortages and Skills Gap | The ongoing shortage of skilled labor in the construction industry is exacerbated by an aging workforce and the rise of remote work preferences. | 5 |
| Impact of Inflation on Construction Costs | Continued inflation is driving up material and labor costs, complicating project planning and profitability for construction firms. | 4 |
| Digital Transformation and AI Adoption | The construction sector is increasingly adopting generative AI and other digital technologies to enhance project efficiency and design. | 4 |
| Resilience in Design Due to Climate Change | Severe weather events are leading to a focus on resilient design and the development of new materials suited for extreme conditions. | 4 |
| Government Funding and Infrastructure Investment | Legislation such as IIJA and IRA is expected to channel significant funds into construction, particularly for clean energy and infrastructure projects. | 5 |
| Mergers and Acquisitions for Strategic Growth | Increased M&A activity is likely as firms seek strategic expansion and cost efficiency amid economic uncertainty. | 4 |
| Market Segmentation and Economic Uncertainty | Different segments of the construction market are experiencing varied impacts from economic conditions, leading to a bifurcated growth outlook. | 3 |
| Workforce Development Strategies | Companies are focusing on innovative strategies to attract and retain talent in an increasingly competitive job market. | 4 |