There Are Statistics and Then There Are Statistics

“Statistics are like a drunk with a lamp post: used more for support than illumination.”

͂    Winston Churchill

The same thing could probably be said about construction statistics. We’re aware of overall trends, but statistics, when employed as a supporting point, actually help to cement those trends that are of significance and those that are simply noise.

A bit of background

Construction has constantly been one of the highest revenue-generating industries worldwide, and the U.S. construction market, in particular, is one of the largest. The industry employs over 7 million people and produces nearly $1.3 trillion worth of structures each year. Moreover, construction is one of the biggest customers for manufacturing, mining and a variety of services.

Apart from the size and scope of the industry, it’s constantly changing and adapting to the existing economic and social environment. At present, we are seeing the post-recession construction boom starting to slow a bit, but in no way is the industry sluggish.

There is supportable growth all through the various segments of construction, chiefly in the private development of single-family homes and home improvement projects. The workplace itself is transforming with an increase in minority and female involvement. New technologies and industry developments such as the employment of drones and building information modeling software are forming trailblazing solutions where inefficiencies and extravagance were once accepted.

But that certainly doesn’t mean the construction industry is without its challenges. There is a persistent labor shortage for skilled workers and plenty of ambiguity around raw material trade and various tariffs. Nonetheless, new technology and innovative designs such as modular construction point to confidence in the future and various firms are boosting staff in response.

Irrespective of a few areas of restlessness, most contractors and construction companies voice confidence in their capacity to rise up and take on the challenges of 2019 and beyond.

Construction industry statistics and data are playing an increasingly important role in the building sector. From measuring bid-to-win ration to how much a project is over budget or schedule, the more numbers you can put behind your work, the better.

Data not only allows for more visibility into the condition of a certain project, but pertinent industry statistics and facts can offer useful info needed to make future decisions dealing with preconstruction planning, productivity tools, risk assessment and workforce efficiency, among others.

We’ve compiled a number of construction statistics to illustrate the state of the industry and give you a picture of the direction it’s heading.

 

U.S. Construction Industry – Overview

The construction industry is growing at a healthy clip. With total expenditures reaching over $1.231 trillion in 2017, the United States is the one of the largest construction markets in the world. After the recession, construction projects that were once delayed have quickened their progress once again. The principal drivers of the thriving construction industry are in the residential market (which includes remodeling). Within the United States, new construction put into place is among the highest in the South Atlantic and Pacific regions.

What are the fastest growing construction markets?

Professionals predict the construction industry will have one of the largest increases in real output, reaching around $1.3 trillion by 2020. Upcoming efforts to modernize the United States’ crumbling infrastructure will produce such output.

The renewable energy sector will also be booming over the next several years. With unrelenting climate change issues, individual state governments, in particular, are urging for renewable energy sources. Such proposals are big business for construction companies.

The U.S. population is expected to grow to nearly 340 million in the next few years, which should bring about a growth in residential housing as well. This should bring residential construction to the top of the growing markets’ list.

Nonresidential construction spending rose 2.4 percent in January, 2019, according to the Associated Builders and Contractors. Public nonresidential construction spending also increased nearly 5 percent in January and private spending increased just under 1 percent. Both public and private nonresidential spending are up 8.5 percent and 2.4 percent, respectively, on a yearly basis.

According to the latest Construction Confidence index, construction industry leaders also remain mostly confident about the nonresidential construction sector’s prospects.

Commercial construction will also continue to grow. With more consumer spending and government investments in tourism, office buildings and retail space, commercial construction businesses will realize the rewards.

Over the past five years, commercial building construction in the U.S. has grown by 11.2 percent to $227 billion in 2018. In the same timeframe, the number of businesses has grown by 1.3 percent and the number of employees by 3.0 percent.

Industry forecasts put the growth at 11.3 percent from 2018 through 2023.  Learn more by visiting https://www.statista.com/topics/974/construction/

 

Construction industry safety statistics

Note: Although these numbers are from 2016, their trends remain rather constant.

In 2016, 10.3 million U.S. workers were employed in construction, a 16% increase after construction employment bottomed out in 2012.  At the time, the Bureau of Labor Statistics (BLS) expected construction employment to increase over the next eight years.  Falls remain the leading cause of work-related deaths in construction, accounting for about one-third of the total number of fatalities in this industry (370 of the 991 construction fatalities recorded in 2016). Although fatal falls followed the overall injury trends, fall deaths rose faster than overall deaths in construction during the economic recovery that started in 2013.  Nearly half of all deaths on construction sites occur in companies with ten or fewer employees or among those who are self-employed.

 

The onus for safety is on the construction manager to provide a safe environment for his/her workers.

 

Want to prevent construction injuries? Pay attention to OSHS’s guidelines, invest in safety-focused construction management software like Intelex, Safesite or HCSS and invest in properly training your contractors.  Learn more by visiting https://www.osha.gov/law-regs.html

 

Labor Shortage is a persistent concern

• Percentage of young construction workers declined by 30 percent from 2005-2016. (BuildZoom)
• 90 percent of U.S. general contractors stated they are troubled over the labor shortage. (USCC)
• Only about one-third of employees in the construction industry were born after 1980, while 52 percent were born between 1960 and 1079. (JBK)
• 40 percent of construction jobs were lost between 2006 – 2011 and industry has struggled to get back since. (eSub)
• 56 percent of builders reported they were suffering due to the effects of the skilled labor shortage. (National Association of Homebuilders)
• 20 percent industry wide turnover rate, one of the highest of all industries. (Bureau of Labor Statistics)

So, how do companies deal with this labor shortage? One staffing firm president describes how he offers benefits, including health care, paid time off and annual raises. Workers are employees, not contractors, he says.

“Having employees really feel like they are permanent here and that there are opportunities attracts them. I think having some kind of ownership and belonging to a company, because we are doing our own projects, is a benefit.”

Offering higher pay, better benefits and on-the-job training – and reaching out to groups of people who don’t fit the traditional mold of a construction worker – are just a few of the techniques construction companies utilize when dealing with an acute labor shortage.

 

Budget percentages that most construction managers spend on IT

The construction industry of 2019 is quite different from what we would have witnessed 15 years ago, even 5 years ago. All industries have become more dependent on networks and technology and information technology (IT) is the essential support structure behind these systems. So why is it that more than half of construction managers spend only 2 to 3 percent of their revenue on IT? And why do only 40 percent of construction managers have a dedicated IT staff they can bank on?

More than likely, it’s because the industry is just a bit old-fashioned and resistant to change. Many construction managers haven’t adjusted to a new environment where there are all sorts of technological tools at their disposal to make their lives somewhat easier.

Truth is, the statistic is a comforting sign that even if you’re not the most technologically inclined manager, you’re far from alone in the world of construction if you scarcely have an IT budget.

 

To the contrary, construction management software shows tremendous growth

Construction management software is definitely a form of technology, so it’s no wonder that as with all other technologies out there, it’s growing exponentially. Each passing year produces new software choices to construction managers looking to better run their businesses.

For example, between February, 2016, and February, 2017, Capterra’s construction management software directory added another 72 construction software options and if anything, that number is expected to surge each year.

Perhaps it’s prudent to set aside some time to poke around and discover what software is out there. You never know what cool stuff has hit the market in just the past few months unless you search for it.

Over time and over budget is a common theme

Going over budget on a construction project is a fact of life, but it’s a big problem in this industry and it results in tremendous headaches for construction managers. Here are some supporting stats.

• Over 50 percent of engineering and construction professionals report one or more underperforming projects in the prior year. (KPMG)
• 69 percent of owners say poor contractor performance is the single best reason for project underperformance. (KPMG)
• Just 25 percent of projects came within 10 percent of the budget in the past three years. (KPMG)
• And only 31 percent of all projects came within 10 percent of the budget in the past 3 years. (KPMG)
• Large projects typically take 20 percent longer to finish than scheduled and are up to 80 percent over budget. (McKinsey Global Institute)
• 98 percent of megaprojects become delayed or over budget. (McKinsey Global Institute)
• 49 percent of construction professionals report spending more time than expected on non-optimal activities. (PlanGrid +FMI)

Let’s face it. A variety of issues can interrupt you during a construction project. You might cope with a jurisdictional fee or permit that you weren’t aware existed. Surprise! Litigation can come out of nowhere if some sort of dispute occurs, leading to costly delays. You may discover decay and dry rot much deeper in your building site than you thought when you first inspected the location or, heaven forbid, you stumble upon some asbestos on a roofing replacement job. The possibilities are never-ending and often expensive.

 

The rise of drones in construction

Drones have already begun changing the way the construction industry does business. Two industries dominate the expected spend with 80 percent share, the construction and agriculture, the former with $11 billion, the latter at $6 billion.

In fact, according to DroneDeploy, drone use on the job site has skyrocketed in the past year, surging 239 percent.

We’ve talked about what’s possible with drones in previous blogs, but who is actually taking advantage of the technology? Project managers, technology managers and superintendents are the top roles benefitting from drone data to date.

As for the consequences? For one, DroneDeploy reports that leveraging drones can increase safety on a construction site by as much as 55 percent.

 

Here are some of the other emerging trends and challenges we’ve found:

• 75 percent of construction firms now market themselves via social media (JBK)
• 91 percent of off-site construction is prefabrication, followed by modular construction at 78 percent. (Built Worlds)
• 86 percent of contractors say they are not effective in or need improvement in prefabrication (Built World) – Visit https://pddmsolutions.com/2019/04/02/modular-or-stick-built/
• 82 percent of contractors concur that BIM (Building Information Modeling) is the future of project information (NBS)
• 70 percent of contractors say BIM is still not sufficiently standardized across the industry. (NBS)
• Around 10 percent of the total construction workforce is female. (Bureau of Labor Statistics)

Statistics can be telling if you know what to look for. Why not give PDDM Solutions a call to help make sense of industry trends and how they can have a direct impact on your business.  Contact us at https://pddmsolutions.com/contact/ or call us at (724) 788-4040.