Insights

2021 U.S. Construction Trends: What Contractors Need to Know

The market size of the U.S. construction sector was valued at around 1.36 trillion U.S. dollars as of the end of 2020 and was expected to decline further in the next year. Volatile disruptions were at the heart of this, such as emergency policies, lower oil prices, and social unrest before the 2020 presidential elections. Overall construction put in place in the United States, both residential and non-residential combined, declined by around 0.2 percent between 2019 and 2020.  

The government's efforts to vaccinate the whole US population have raised hopes that hard-hit sectors such as leisure and hospitality, retail, offices, and air transport could recover faster in the fourth quarter of 2021. Rising construction costs and labor shortages persist, challenging the industry to innovate competitive new ideas, while stricter regulations contribute to a reduced margin for error and waste. However, market analysts are predicting that the construction industry will continue to recover over the course of 2021. Here are the construction trends in the United States that you should know.  

Growing Need for Laborers  

One of the most noticeable construction trends is a vast increase in the demand for labor. Quality labor is expensive and competitive, though robots do pick up a lot of the slack. Despite these robots' best efforts, there is a need for more educated workers to manage and interpret the data produced by new technology. Fortunately, women are stepping in to fill more competitive roles. According to the Bureau of Labor Statistics, women occupy only 10.9 percent of construction industry jobs, and industry hiring trends show a 94 percent growth in female-owned construction firms from 2007 to 2018.  

Additionally, 30 percent of construction companies promoted a woman to a senior position in 2018. The industry is also targeting Generation Z, born between 1995 and 2010, in recruiting efforts. In the past, negative perceptions of trade school were detrimental to efforts to hire new talent in construction. The COVID-19 pandemic caused a shift in attitudes toward alternative education options and resulted in increased positive attitudes toward trade school, positioning construction firms to show off the career growth potential in their industry and the abundant opportunities to experiment with new technologies. 

Increased Use of Design Technology   

Technology influences nearly every aspect of the construction industry. And perhaps the most popular tech used today is Building Information Modeling (BIM). BIM reimagines the construction design and production process before it even begins. This design technology allows the user to create a virtual model of the building. In addition to improving design and drafting efficiency, BIM saves everyone on the project time and money.  

BIM design technology enables builders to conceptualize and study the project before they even break ground. The virtual walkthrough of a building allows contractors to pinpoint any issues that might throw a wrench in the construction process before the team sets foot on site. This saves money both in the planning stages and during the building process when there's no time for unforeseen issues or mishaps. Design technology has come a long way from the days of pencil and paper. Construction companies now use BIM to strategize and plan more efficiently and accurately than ever before. 

 

Protective Equipment  

The COVID-19 pandemic drastically impacted the construction industry, affecting job site and business guidelines by way of state regulations emphasizing cleanliness and strict safety protocols. The industry is now witnessing a rise of machines capable of identifying common safety issues and eliminating those threats one at a time.  

Wearable innovations are making their way to the job site with work boots that connect to Wi-Fi and alert others if a person has fallen, material moving "mules" transporting heavy materials, and robots construct scaffolding autonomously. These robots are changing the jobs humans do. In most cases, they're augmenting human decision-making (like deciphering and translating data findings into actionable insights) and making room for different, higher-level jobs. 

 

Offsite Construction  

Offsite construction, one of the emerging construction industry trends, allows designing, manufacturing, and fabricating building elements in a factory. In traditional construction, weather conditions increase costs by introducing contingency fees and require extra labor hours. Onsite construction also produces a lot of material waste. Offsite construction, on the other hand, transforms the construction lifecycle in terms of sustainability, worker safety, and quality. It incorporates a range of innovative materials, 3D printing technology, and novel assembling techniques.  

The first part of offsite construction involves volumetric construction, which includes modular and pod construction. This technique allows the prefabrication of heavy 3D structures like rooms and homes. The second aspect includes panelized construction under which the factory develops flat panels for use in walls, floors, or roofs. Modern commercial buildings use this technique to install partitions and support elements. Hence, startups provide modular construction solutions to replace traditional construction methods. 

Tightening Insurance Markets 

We are seeing double-digit increases in insurance premiums across the market and corresponding efforts by carriers to tighten their underwriting standards and to include new exclusions in their products. Workers' Compensation rates have been affected by actual and potential claims arising from workers who were or who may have been infected with COVID-19 at work. Carriers have introduced exclusions for communicable diseases in the scope of coverage so that claims from non-employees infected on the site would not be covered by your insurance.  

Insurance premiums are based on the volume of work or payroll, and as business has dropped off for some contractors, it appears that the carriers have raised rates to offset the lower base and maintain their overall premium revenue. Market forces should address this over time, but COVID-19 claims are difficult to quantify at this time. While contractors have always had to live with the risk of fluctuations in their insurance rates, contractors should consider adding provisions to their contracts sharing the risks (and perhaps rewards) of these rate changes with owners over projects where policies are to be renewed, possibly at much greater rates. In cost-reimbursable contracts, this may be reflected by having the actual cost of the insurance included as the cost of the work.