Construction Trends: A Midyear Review

The year is serving up a mix of positive developments and significant challenges.

More than halfway through 2018, we’ve seen and written about a handful of construction industry trends that could have significant impact in the remainder of the year and beyond. Here are eight to note.

Material prices are rising fast

Although the cost of some materials decreased slightly between June and July 2018, the year-to-year prices are continuing to move upwards. In June the Associated Builders and Contractors announced that construction materials rose 8.8 percent in a year.

Some sectors, especially those affected by tariffs, have seen even higher increases. As of June 2018, iron and steel prices are up nearly 14 percent over the previous 12 months and the cost of softwood lumber has risen by about 23 percent. The increasing costs of materials could squeeze contractor margins and diminish demands for construction services.

Contractors are trying out new materials

With costs increasing, contractors are looking at alternatives that may offer some advantages over traditional building materials. Some have built mid- to high-rise towers and other projects (such as McDonald’s in Chicago) with mass timber — very strong, engineered wood products that can serve as a replacement for traditional steel and concrete structural elements. Mass timber is also appealing because of its relatively low carbon footprint.

Composite materials have attracted builders’ attention because they are both strong and lightweight. Contractors are using composites for cladding and roofs on buildings, for structural repairs on bridges and other infrastructure and for constructing reusable, unusual-shaped molds for poured concrete.

More construction is happening offsite

In their Q1 2018 Construction Index, USG Corporation and the U.S. Chamber of Commerce reported that 62 percent of general contractors are now using prefabricated or modular components for their projects. Half of them expect to increase their use in the next three years. The most commonly used pre-fabricated components are exterior walls, building superstructures and mechanical, electrical and plumbing building systems.

Most recently, modular has heated up in the multifamily sector, especially in the Northeast, the mid-Atlantic and the Midwest.

Design-build is taking over

In a report from management consulting company FMI, half of the owners surveyed said they are using or plan to use design-build contracts in the next five years. The Design-Build Institute of America says the approach fosters collaboration and teamwork and leads to higher-quality projects completed faster and more cost effectively.

FMI anticipates that design-build contracts will represent up to 44 percent of construction spending in the commercial, office, lodging and healthcare markets by 2021.

Lean is gaining steam

Contractors are exploring the benefits of lean construction methods, which encourage collaboration among employees at every level — managers, supervisors and trades people. Advocates of lean construction say that by working together, team members can reduce waste, use time more productively, save owners money, enhance contractors’ profitability and create a better, safer work environment.  

Increasingly, owners are even requesting lean construction in RFPs.

The labor shortage is pushing wages up

With a continuing shortage of workers and an extremely low unemployment rate for construction workers (3.4 percent in July), companies should probably plan for additional wage increases. The Bureau of Labor Statistics reported that wages for construction workers increased 2.9 percent between June 2017 and June 2018. That’s 10 percent higher than the average increase for all non-farm private sector jobs.

Reality capture is playing a bigger role

More and more contractors are using reality capture in an effort to boost productivity. Virtual design and construction (VDC) teams at larger firms are using laser scanners, 360° photos and of course, drones, to calculate installed product quantities, identify deviations from BIM models, decrease site visits and even identify cost-saving opportunities. A May report on the state of the commercial drone industry found that construction drone usage had increased 230 percent year over year.

Sustainability goals are growing

The concept of green building continues to evolve. Net zero as a goal is slowly giving way to net positive energy. And big thinkers in green building are embracing the concept of regenerative sustainability. Forward-thinking owners like the idea of building structures that produce as much or more energy than they use, filter their water on site and can adapt to different uses in the future.

Meanwhile, energy-efficient materials matter to many owners and larger contractors, at least in most areas of the country. According to the Q2 2018 Commercial Construction Index, roughly one quarter of contractors in the West, Midwest and Northeast encounter frequent customer requests for energy efficient materials. The report also found that 41 percent of general contractors frequently seek out such materials.

 

Freelance writer Mary Lou Jay writes about business and technical developments in a variety of industries. She has been covering residential and commercial construction for more than 25 years.