The construction industry is an essential component of the global economy, employing millions of workers and driving development across a wide range of sectors. However, the industry faces numerous challenges that threaten to impede its growth and productivity, from
supply chain disruption to rising energy costs.
Despite these challenges, there are also significant opportunities and trends that offer hope for the future, including increased government spending on infrastructure, emerging technologies, lean construction and green building practices. Read on to find out more.
Challenges
Some of the challenges facing the construction industry in 2023 include:
Supply Chain Disruption
One of the most pressing challenges facing the construction industry is supply chain disruption. The COVID-19 pandemic has exposed the vulnerability of global supply chains, particularly in the construction sector, which relies heavily on imports of raw materials and components from overseas. Delays and shortages in the supply chain have resulted in increased costs and project delays, posing a significant threat to the industry’s productivity and profitability.
You can read more about this topic in our article Supply Chain Challenges and Tips For 2023.
Rising Energy Costs
The construction industry is a significant consumer of energy (it makes up 36% of worldwide energy use!), and the cost of electricity, fuel and other energy sources is significantly impacting project budgets and profitability. Furthermore, the industry’s carbon footprint and environmental impact are facing increasing scrutiny, placing further pressure on companies to adopt more sustainable practices and technologies.
Labour Shortages
Labour shortages are another major challenge for the industry, with an ageing workforce and a declining interest in construction careers contributing to a significant skills gap. This skills gap has the potential to hamper the industry’s growth and productivity, as well as drive up labour costs as companies compete for a dwindling pool of skilled workers. By 2025, the industry will need an additional 200,000 new workers in order to meet demand.
This is particularly concerning given the industry’s importance to the broader economy, where infrastructure and construction are necessary for economic growth.
Inflation and Rising Interest Rates
High inflation rates are driving up the cost of materials and labour, with the prices of materials peaking at a high of 26.8% in June 2022. Rising interest rates, meanwhile, are making financing projects more expensive. These factors are impacting project budgets and are making it more difficult for companies to secure financing for new projects.
ESG and Sustainability
ESG and sustainability are two more significant challenges for the industry, as companies face increasing pressure to reduce their environmental impact. With the construction industry producing 40% of CO2 emissions globally, it’s no surprise that governments, investors, customers and employees are urging companies to reassess their waste, materials and transportation policies.
Slowing of the Private Residential Market
The private residential market is also slowing due to the ongoing economic crisis, which has led to reduced demand for new homes and increased competition among construction companies. This market slowdown has put further pressure on construction firms, particularly those reliant on residential construction for revenue.
Opportunities & Trends
Despite these challenges, there are also significant opportunities and trends in the construction industry that offer hope for the future.
Increased Government Spending on Infrastructure
Increased government spending on infrastructure is one such opportunity, with governments around the world recognising the need to invest in critical infrastructure projects to drive economic growth and recovery. These projects will include everything from transportation infrastructure to renewable energy facilities, providing a significant boost to the construction industry.
Emerging Technologies
Emerging technologies are also poised to transform the construction industry, with advances in areas such as robotics, AI and 3D printing providing opportunities for increased efficiency and productivity. Trends in ERP are also positive for the construction industry, with many vendors now focusing on more industry specific solutions. For Example, Sage 200 for Construction allows construction firms to increase efficiencies and save costs through advanced automations tools.
Lean Construction
Lean construction is another trend that has gained momentum in recent years, with companies adopting new techniques to reduce waste and improve efficiency in the construction process. Advances in modular construction technology have also meant that many components can now be built and assembled off-site which saves both time and money.
Private Non-residential Construction
Private non-residential construction is also expected to increase further in 2023, particularly in areas such as logistics and warehousing, which have seen a surge in demand due to the growth of e-commerce. This rising demand for commercial space provides significant opportunities for construction companies and highlights the importance of adapting to evolving market trends.
Demand for Green buildings
With the conversation around climate change evolving every day, green buildings are becoming increasingly popular, with more emphasis on eco-friendly materials, renewable energy sources and energy-efficient designs.
Growth of Public Sector & Civil Engineering Projects
The public sector and civil engineering are also expected to grow, with governments investing in more transportation, water and energy infrastructure, like HS2 in the UK. The growth of these sectors is expected to provide new opportunities for construction firms and professionals to collaborate and develop new technologies and solutions to meet the demands of the future.
Final Thoughts
There is no denying the importance of the construction industry and the role it plays in our economy and society as a whole. However, in 2023 and beyond, the sector will continue to face a number of challenges.
The growing debate around the economy and the climate play a direct role in this, but they also free up opportunities for the industry to develop in a new direction. An example of this would be society’s concerns around global warming, putting more pressure on the construction industry to reduce its environmental impact. This is a challenge as it requires companies and firms to change how they currently carry out business.
However, because of this demand, new opportunities are arising, such as the need for ‘green buildings’ as well as sustainable materials that will require manufacturing and distributing. This, in itself, provides more employment opportunities and environmental growth in the industry.
Why choose Eventura to help deliver your Sage 200 project?
With two decades of Sage deployments under our belt, we are experts in delivering robust Sage 200 solutions that are meticulously designed to suit your specific business needs. We take a full 360-degree view of your business, and help you identify all of your requirements.
Our team of expert business analysts, developers, consultants, technicians and support staff will guide you through your Sage 200 project from conception, through to deployment and ongoing support.
If you would like to speak with one of our Sage 200 experts, you can request a free call back here.
