The global construction industry is growing every year, with projects becoming more complex. However, the demand for skilled talent is outstripping supply, driving many companies to seek help from external staffing, technology and solutions providers. Here are major trends that are expected to drive construction outsourcing decision making in Q2 and the rest of 2016:
The global construction industry is growing at an average rate of 3.9 percent every year, which is expected to continue until 2030, according to a 2015 report from Global Construction Perspectives and Oxford Economics. The volume of construction output is expected to grow by 85 percent to $15.5 trillion by 2030, driven by emerging countries that are industrializing and developed areas recovering from slow economic growth.
Three countries will account for 57 percent of all global growth: China, the United States and India. The US construction market is predicted to grow faster than China in the next 15 years, while India will lead emerging markets in terms of construction growth. China’s construction market is expected to slow down and hit historic lows in 2016. In Europe, the United Kingdom is expected to lead the region in construction activity and become the world’s sixth largest construction market by 2030.
Qualified construction professionals that left the industry during the recession are not coming back now that the economy is recovering, and many companies are struggling with the continuing skills shortage. According to the U.S. Bureau of Labor Statistics, contractors reported 143,000 unfilled jobs in June 2015. Out of 50 states, only 28 added construction jobs in the middle of the year due to limited budgets, older workers retiring, the unreliability of construction jobs, and general lack of interest in construction jobs.
While construction activity has picked up in 2015, growth will continue to be slow due to lack of skilled labor. This is why many firms will continue to partner with third party firms that provide staffing and other construction support services. Outsourced staffing is expected to continue in 2016 and the coming years to fill the need for qualified engineers, architects, consultants and construction workers. Offshore virtual assistants and support staff will also be in demand, particularly for smaller firms looking to scale up their workforce at a cost-effective rate.
Due to the prevailing labor shortage in the construction sector, companies will continue to outsource staffing and support services (and complex, strategic services to a lesser extent) to third parties in 2016. The need for external help is great as owners require additional and temporary employees, especially project management specialists, craft labor workers and construction planners. A 2015 global construction survey showed that more than two-thirds of the executives in the study reported the need to hire a large number (more than 5 percent of the workforce) of external project management experts, with 87 percent of large organizations needing to support in-house project teams. The larger the company, the greater the need for outsourcing.
As construction projects grow more complex and companies outsource an increasing number of tasks to external firms, the role of internal employees are shifting from task execution to management of contractors and schedules. This trend requires a strategic approach to talent management—an integration of human resources considerations with overall business strategy, risk mitigation, ROI and infrastructure. In the coming years, more organizations will leverage new technologies to make better hiring and talent decisions.
While data analytics now underpins the majority of business operations, data-driven talent management has been slower to take root. This is going to change in the next few years as tools like predictive modeling and retention algorithms are used to predict future workforce needs and determine which employees are likely to retire or leave the company. Data analytics will also be used to reward top performers, justify recruitment strategies and measure the gap between average and outstanding employees. Organizations will seek help from third party specialists and solutions providers for talent management tools that address skills shortages and other HR issues.
Sustainability will come to the forefront of the construction outsourcing industry in 2016 and beyond. Eco-friendly options in construction, engineering and architecture are evolving quickly, and sustainable infrastructure are fast becoming the new normal in light of rising consumer demand for green buildings, cost pressures and more stringent regulations. The need to develop sustainable buildings, highways, railways, bridges and airports has never been higher, with a growing demand for energy efficient structures across the board.
The U.S. Clean Power Plan could also impact the sustainability movement in the commercial and industrial construction segments. Proposed benefits under the plan (which include tax credits for electricity generated from renewable plants) could boost the construction of solar and wind farms in America.
By Q2 of 2016 and beyond, the demand for engineers, architects, consultants and project managers that understand sustainable design and green development will continue to grow. Companies that find it difficult to find the right people will turn to third party service providers for help. Besides outsourced professional staff, virtual support workers will also be in demand, particularly for small and midsize firms.
Traditionally, the construction industry has moved and evolved somewhat slower than other sectors, with veteran construction executives resistant to advancements in technology and processes. However, many are now embracing innovative methods and keeping up with trends that have a major impact on the industry.
Increased use of BIM and construction apps
A recent Texas A&M University study found that the construction industry trails behind others in terms of technology use (mobile applications, cloud services and others). This is slowly changing, however, as contractors begin to understand the benefits of using the right technology. For example, building information modeling (BIM) is now widely adopted. BIM software creates digital models of buildings and assets, allowing engineers and managers to assess safety risks, plan off-site work and eliminate unnecessary spending on materials.
Mobile app use is also rising in the construction sector as workers use advanced smartphones and mobile devices at job sites. Construction apps help workers schedule appointments, view purchase orders, view site plans, look up building codes, change designs and even measure the job site heat index. In 2016, more firms will use advanced BIM software and mobile applications to save time, reduce waste, improve job site safety and improve productivity.
2016 will witness the rise of consolidated systems in the construction sector. Consultants are stressing the importance of the digital experience to a company’s brand and how it needs to extend to workers in actual job sites. The BYOD (bring your own device) trend has led to the expectation of construction professionals that work devices will be as easy to use as home devices. This means that corporate IT teams should treat their construction teams as customers, in terms of providing support and user-friendly technology.
One way to do this is by consolidating the company’s various systems into one accessible platform where all the resources that field workers need can be accessed at a touch of a button. These resources include accounting and project management systems, CAD software, BIM technology and others. To reduce app footprint and complexity, companies will seek help from third party firms providing integration services, mobile apps, and cost-effective cloud solutions.
3D printing in the construction industry is still in its infancy, but more firms will realize its real-world benefits in 2016 and the coming years. 3D printers have greatly improved in terms of speed, quality and features. More materials can now be printed, and new models are able to print and assemble product parts. Some contractors are already experimenting with 3D printing to reduce building time and costs. An American startup, for example, is said to be using the world’s largest free-form 3D printer to build walls for new residential homes. Many contractors are also experimenting with off-site construction methods to reduce build time and cost for residential and commercial projects. One company plans to develop construction kits containing pre-cut fixtures, windows, panels and majority of other required materials to the local contractor who will build the house.
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