The past year was a tough one for many people, but in many ways, it was a good news story for construction. Demand for construction work remained sky-high throughout the year, and while some materials and input costs rose, others dipped.
Similarly, 2023 promises to be a year of mixed blessings. While the overall picture still looks rosy for the industry, the ever-changing dynamics of the construction landscape emphasize the need for dynamic and adaptable owners, contractors, and workers to maintain resiliency.
Here are some of the biggest trends we see for the construction industry for 2023.
1) A chance to catch up on the backlog
There are some indications that extreme demand for construction will soon wane. Slowed demand could sound like bad news, but the backlog of projects should keep construction going strong for the next year. Funds from the Infrastructure Investment and Jobs Act (IIJA) are beginning to flow, too, which will help drive continued appetite and keep construction going for some time.
2) The big push is in infrastructure
Despite some concern over housing shortages, new housing starts took a deep dive during 2022 as increased interest rates took a toll on homeowner sentiments. Luckily, increased infrastructure spending was there to pick up the pieces.
There is considerable pressure to improve the state of infrastructure across the country to enable better communication, transportation, power delivery, and trade. The IIJA is part of that push and will continue investing money into capital projects throughout 2023.
3) A focus on sustainability
The construction industry has been paying more attention to building sustainable structures and reducing its carbon footprint in materials use and procurement. The UN environment programme’s 2022 Global Status Report for Buildings and Construction found that investments in building energy efficiency increased by 16% last year.
Builders focus on erecting net zero structures, investing in green technologies, and enforcing buy clean policies, while governments influence outcomes through building code amendments. Still, the sector’s overall CO2 emissions continue to increase. Construction accounts for 34% of the world’s energy demand, and the industry is not currently positioned to achieve decarbonization by 2050, which is its stated goal.
The industry will continue its efforts to get back on the path to decarbonization during 2023, evidenced by increased investment in green construction in the sector, with improved initiatives toward net zero building, the use of sustainable materials, green roofs, and passive design. Moves toward offsite construction and more efficient project management (often through the use of digital construction solutions) will also be a focus.
4) Efficiency and productivity rule the day
Construction input costs are on the rise. Rising interest rates, supply chain unpredictability, labor shortages, and inflationary pressures make building more expensive. Contractors must keep their ducks in a row to maintain viable business operations.
Focusing on efficiency and productivity will help companies prevent failed projects and lost revenues. The possibility of a coming recession puts even more pressure on contractors to be productive and resilient – both facilitated by technology.
Tech tools can improve construction operations in several ways. Companies could become more efficient by using construction management systems that allow all stakeholders on a construction project to access documents, communicate changes, and predict schedule conflicts before they occur. They could become more efficient by automating repetitive and workforce-intensive tasks so that teams can use their time more productively. Whatever form they take, tech solutions will provide greater productivity for successful companies.
5) Digitization and automation
Whether the pressure comes from broad economic trends or competitors using digital tools to outperform, robotics, AI, and digital solutions will be the focus for many contracting companies through 2023. One simple swap that can reduce manual tasks while simultaneously improving outcomes is the migration to digital payment systems.
With Truss, you can import invoices straight from your inbox to make approval, payment, and reconciliation a breeze and minimize data entry tasks. With this one simple system, you can reduce payables and accounting efforts, increase payment security, and improve vendor relationships.
Regardless of the size of your company or the number of projects you have on the go, payments are something all contracting companies have in common. You have to make them, and you have to receive them. By starting your tech journey by adopting digital payment processes, you can realize immediate wins with a smaller learning curve than many tech solutions.
Whatever it looks like, research shows that companies that are open to tech solutions outperform those that are stuck in the tried-and-true.
The Year Ahead
The past year held some ups and downs for construction professionals. Demand has held consistent for construction work, but the cost of doing business has made it difficult for many companies to compete. The trends in construction for 2023 show efforts to improve operations through innovation, sustainability, and training, all of which will help the industry become stronger through the year ahead.
