By any measure, 2020 has been one of the most chaotic, unpredictable and, unfortunately, difficult years the construction industry has ever experienced. Being resilient by nature, contractors have weathered the social and economic storm and in some cases have been able to improve their operations and even thrive.
Briq’s Executive Vice President of Marketing and Industry Pam Hummel reviews a few key events that impacted the industry in 2020.
Let’s dig in.
The Main Event
Covid-19 is the story of the year - and possibly the story for several years. The pandemic, which began in Q1, 2020, significantly impacted the construction industry - as it did the entire American and global economy. In some cases, contractors fared better than other industries. AGC of America and other construction trade associations lobbied state and federal legislators to certify construction as an “essential business” and were, in most cases, successful.
However, maintaining operations was not as easy as just showing up at the job site or office, as if things were “normal”. Social distancing, enhanced hygiene, and additional safety requirements put strains on project budgets, completion dates, and labor demand. The skilled labor shortage was a source of industry stress prior to Covid-19 and the pandemic only intensified the challenge, as many construction workers also struggled with infection from the virus that removed them from the job market for weeks or even months.
The effects of the pandemic are likely to be felt within the industry for the foreseeable future. In their annual Construction Outlook, Dodge Data & Analytics forecasts a modest 4.1% increase in construction starts, while anticipating that a jagged recovery throughout 2021 will not put the construction industry on a true path to recovery until early 2022. This outlook takes into consideration a possible vaccine that could enable a return to some degree of “normalcy” in the construction workplace and beyond.
New Ways to Work
Contractors found new ways to work and network - albeit virtually - in 2020. Construction is a hands-on business, that by its nature requires people to work in close proximity to one another. In the field, new processes for project sanitation and hygiene were implemented in order to comply with safety and social distancing requirements.
In the office, most construction companies were required to quickly pivot to a work from home (WFH) model, in order to comply with state and local regulations. This came as a paradigm shift for most contractors, who had not previously implemented WFH on a broad, industry wide scale. Many have discovered that efficiencies and productivity can exist, and have embraced a remote-first model that will likely become far more common - even after the pandemic resolves - than it likely would have otherwise.
The construction industry has been highly invested in trade associations and the educational conferences that enable them to learn and network. Those events often host anywhere from 100 to 10,000 and in some cases, upward of 100,000 attendees. Since March, 2020 all large scale events have either been cancelled or re-imagined as virtual meetings which have, largely, provided the business and social interaction the industry has come to rely upon. It’s anticipated that medium to large scale events will not return until at least Q2 of 2021 and may never return in the way that they existed in the past. However, the AGC of America is holding fast to their plan of an in-person convention scheduled for March, 2021. Their annual convention typically garners over 2,000 attendees, but it remains to be seen whether state and local regulations will allow an event of that size to proceed.
Technology Drives Productivity
The sudden and unexpected separation of office employees from their normal work environment caused many contractors to rely more heavily on technology as a solution. In addition, contractors who had not previously invested in jobsite technology found themselves exploring the possibility of technology to support the need to provide contact tracing, verify that workers are maintaining social distance, and electronically process project documents that might previously have been produced manually.
“The past 6 months have been all about the pandemic and economic factors. A lot of the development schedules for construction software companies have been upended a bit, because they've rolled out a whole suite of functionality to deal with COVID-19 reporting, proximity sensing, etc. That’s where I’ve seen innovation across companies we speak to and work with: employee tracking, contact tracing, employee self-reporting.”
As a result of the pandemic, many contractors have embarked on a technology journey that they might have postponed for several years. Now armed with the knowledge of the benefits of construction software, data, and analytics, contractors may be more inclined to explore and adopt these solutions than they have been previously.
Diversity, Equality, and Inclusion
Spurred by local, regional, and national demands for social justice, the construction industry stepped up and began to tangibly address the issue of diversity, equality and inclusion. The Associated General Contractors of America, along with other trade associations, have taken the lead, launching their new “Culture of CARE” program, intended to improve diversity in the industry by making construction job sites more inclusive. CFMA (Construction Financial Management Association) has also established their first national DIversity Task Force, with initiatives expected to follow.
Studies have confirmed that diverse workplaces are safer and more efficient. In an industry that desperately needs skilled labor, the ability to offer a diverse and inclusive workplace is not only the right thing to do for employees, it may encourage newcomers to enter the construction workforce.
Decision 2020 - What Does the Election Mean for Construction
The outcome of the 2020 presidential election was forefront on the minds of most industries, and construction was no exception. In the later weeks of October, an overall feeling of “industry paralysis” was pervasive, as contractors took a wait-and-see approach to business operations, pending election results.
According to ENR Magazine, however, construction industry response to the results of the election have been mixed. While both candidates promised infrastructure funding, it is unclear exactly how much that funding might be, and whether or not President-elect Biden can persuade Republican Senators to support such legislation. Although all parties agree that a healthy construction industry is an important part of the overall economy, it’s yet to be seen if that can be accomplished if Republicans maintain the Senate Majority.
Speaking to ENR Magazine, industry expert Jay Hansen, Executive Vice President for Advocacy for the Asphalt Pavement Association remains hopeful - “I think President-elect Biden is very pragmatic. If Republicans hold the Senate, it's a divided government,” Hansen says, “which means on transportation, compromises will be necessary, as with other legislation. He adds, “And I think Biden can steer this thing down the middle.”
It’s unlikely that much will be known about the tangible impact of the election until early 2021, however it’s certain that industry advocates will continue to push for maximum funding with minimal legislative constraints, in order to accelerate the industry’s economic rebound.
Every year has its share of notable events and unexpected circumstances. It would be fair to say that 2020 had more than most. However, contractors are nothing if not resilient and the construction industry has shown time and again the ability to rebound from economic and societal challenges. Lessons learned from the 2007/2008 “great recession” will certainly guide the strategies for the upcoming recovery. We look forward to supporting our clients and the industry as we continue to move forward to healthier and more prosperous times.
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