Construction Law Blog

Construction industry professionals faced a number of challenges in 2019—chief among them a persistent labor shortage. 2020 promises to bring similar challenges to the construction industry. Below we identify six trends we expect to carry forward into the new year.

1. Continued Labor Shortage

The construction industry will continue to face a labor shortage in 2020.

A survey by the Associated General Contractors earlier this year revealed that 80% of firms reported having trouble finding workers to fulfill hourly craft positions. 33% of respondents reportedly believed that hiring would remain difficult and 48% believed it would become more difficult within the next year. The U.S. Department of Labor Bureau of Labor Statistics reported that at least 388,000 construction job openings existed as of September 2019. Immigration policies and enforcement under the current administration also play a role in the availability of workers.

To combat the labor shortage, some businesses are increasingly focused on recruiting and efforts to strengthen the school to jobs pipeline. Other methods used by many to combat the labor shortage include a greater reliance on subcontractor labor; a focus on lean construction, pre-fabricated or modular construction; and use of technological advancements to streamline design, construction and project management processes. Companies should also be vigilant to avoid overextension on projects or by individual workers.

2. Technological Advancements

The use of AI, BIM, drones, wearables and other technological advancements will continue to alter the landscape of the construction industry in 2020. Technological advancements have implications for all aspects of the industry from design to construction to project management to dispute resolution and site safety. Industry professionals will continue to look to technological advancements as a way to streamline projects and increase efficiency, particularly in the face of a continued labor shortage. 

3. Green Construction and Climate Risks

Climate change has and will continue to present increased challenges to the construction industry. Construction professionals will be challenged to design and construct buildings and infrastructure that can withstand increasingly severe weather and natural disasters. Demand will continue to increase for energy efficient and green buildings and construction that will result in less waste and pollution. The industry is also facing increasing pressure to reduce emissions and waste during the construction process.

4. Modular and Pre-fabricated Construction

Modular and pre-fabricated construction remain on the rise. These forms of construction result in more off-site work and may promise associated cost benefits in addition to energy efficiency, less waste and shorter construction times. Office buildings, stores, hotels and similar commercial buildings are good candidates for such forms of construction.

5. Spike in Design-Build

The use of design-build project delivery has been on the rise in both the public and private sector, and industry experts expect this trend to continue in 2020 and beyond. FMI Corporation’s Design-Build Market Research anticipates that design-build will account for 44% of construction spending by 2021 in the following markets: nonresidential, highway/street and water/wastewater. Design-build can offer a number of advantages including streamlined project management and scheduling and cost savings. Successful execution and completion of a design-build project requires an owner/developer and a design team familiar with the intricacies and risks involved in the design-build process. Design-build projects can be perilous for an inexperienced owner/developer or design team, so care should be taken to ensure that each party is aware of its obligations with respect to any design-build project. 

6. Increase in Public Construction

While experts believe a recession is not likely going to happen in 2020, this assertion may depend upon a trade deal with China and no escalation in tariffs. Assuming that a recession does not occur, Dodge Data & Analytics predicts that public construction will lead the market in 2020. The Dodge Construction Outlook anticipates that nationwide education construction will increase 2%, healthcare construction will increase 3% and non-building public works will increase 4%. The Dodge Construction Outlook forecasts some decline in other sectors in 2020, with housing falling by 6% and a 13% decrease in multifamily housing starts. However, the National Association of Home Builders disagrees and expects a 2.2% increase in single-family housing starts in 2020 followed by a slightly greater increase in 2021. Needless to say, public construction may likely see a boom in 2020.

2020 and this next decade will be an interesting period of challenges and opportunities for the construction industry. Companies should consider the trends mentioned above and how each might impact performance or growth in order to stay ahead of the curve.