Recessions, labor shortages and volatile construction market conditions grabbed the headlines in 2023. As planning begins for 2024, there is an opportunity to learn from last year to adjust and prepare for what the future holds. To understand what lies ahead, Procore partnered with research firm Censuswide and surveyed more than 1,000 construction professionals in the United States and Canada. The Report How we build now highlights the survey results and provides powerful insight into where construction leaders are making big bets over the next 12 months to prepare their business for the future.
Analysis of the survey results highlighted five key points and tips to consider when planning for 2024 and beyond:
1. Be strategic and optimistic.
Ninety percent of respondents reported feeling confident about market conditions over the next 12 months, with 50% feeling very confident. Despite economic uncertainty and inflation in the US and Canada, 74% of respondents expect both the number and value of projects undertaken by their organizations to increase in the next 12 months. This significant business confidence is unique in light of the overall weak economic outlook and may be the result of investments in government infrastructure and public transportation in both countries.
2. Use data to drive business decisions.
Having access to historical project data would help construction professionals make better decisions, according to 43% of respondents. They also reported that an average of 13% of total project spend can be saved by capturing and standardizing data more effectively. Investing in solutions to remove data from silos and make it more accessible to decision makers is critical when considering which technologies to implement in the future.
3. Address project performance and cost-effectiveness challenges head-on.
Rework remains a problem in workplaces. Construction professionals said that 28% of total project time is spent on rework, while 18% of project time is spent on data research. These factors significantly impact performance, with nearly half of projects reported to be behind schedule and over budget, creating waste and leaving clients dissatisfied.
With project performance in sharp focus, construction professionals are looking to technology to help them improve productivity and profitability. When asked about the factors that would improve productivity within their organization, one of the top responses from respondents was the adoption of technology to make teams more efficient, along with bringing in contractors before the pre-construction and planning stages of a project and the improvement of employee qualifications.
Similarly, when asked about factors that would improve their organization’s profitability, the top responses were: 1) simplifying existing technology and processes; 2) make improvements to the way projects are priced to improve the accuracy of estimates; and 3) adopt technology to make teams more efficient.
4. Review and optimize your technology stack.
Owners, general contractors and specialty contractors reported that they are reviewing their technology stacks and business needs in light of the unpredictability of the industry. Thirty-two percent of respondents said they needed it new technology to help drive operational efficiency and cost controls in reaction to economic conditions. Meanwhile, 22% of respondents said they were looking into it existing technology to understand what works and what doesn’t.
As construction leaders look to embrace technology to help them navigate challenging times, digital transformation is on the rise, with property owners leading the way. While many are looking to become a digital first business, 26% of respondents noted that they still use paper records or non-digital processes as part of their workflows. Looking ahead to 2024, it is expected that many organizations will continue to make a concerted effort to drive their digital transformation.
5. Address cash flow and insurance roadblocks with data and technology.
Late payments have long plagued the construction industry, leading to cash flow challenges, especially for specialty contractors who must finance their materials upfront. In fact, 47% of specialty contractors and 39% of general contractors reported experiencing cash flow problems resulting from late payments. Additionally, 36% of landlords said delays from not getting paid quickly have cost them money.
While payments are one part of the equation, insurance is the other. Fifty-five percent of respondents said the industry can do a better job of leveraging existing data to simplify payments and improve insurance programs.
Risk management also remains a challenge. Thirty-six percent of respondents reported frustration with the time it takes to obtain construction insurance quotes. It is clear that in the new year and beyond, the construction industry will look to insurance companies to improve their offerings by using operational data to account for the risk mitigation efforts that contractors are implementing with technology
Entering 2024
The construction industry has experienced its fair share of challenges in recent years, but the industry is made up of pioneers, who turn to innovation in the face of adversity. This strength, together with the harnessing of data and the application of new and evolving technologies, means that economic and industry challenges can be overcome.
To dive into the details and learn more about how the US and Canadian construction markets are shaping up in 2024, download the full paper Report How we build now.
