AECCafe Industry Predictions for 2023 – Planhub

By Ro Bhatia, CEO, PlanHub

Ro Bhatia

2023: The Year Technology Takes Over Construction

Across all industries and sectors, 2022 brought some of the most complicated challenges businesses have had to face. As we head into 2023, several of those same challenges and complications still need to be resolved and will continue into the new year. One industry that will continue to face prolonged difficulties into and throughout 2023 is the construction industry. While it was able to weather the economic pandemic slowdown, it is not immune to the issues of labor demand, volatile pricing, and inflation. Thankfully, there is still a light at the end of the tunnel, and the construction industry can build the road to it, given the right tools and technology.

Lack of Skilled Labor

The story of labor shortages in the construction industry is not new. It is a tale as old as the hammer and nail. According to a survey completed by PlanHub, both general contractors and subcontractors responded that their top concern in 2023 will be the difficulty in finding skilled workers to hire. These labor complications don’t just end there. Labor shortages can create a wave of adverse ripple effects, including delays in accepted projects, price increases on future or ongoing projects, or, even worse, contractors or subcontractors having to turn down projects because they lack the workforce to see them through.

As we begin 2023, general contractors and subcontractors will still be searching for wells of skilled talent, but the talent pool is continuing to dry up. Over the coming decade, over 40% of the construction workforce across the country is expected to retire. To combat this rapid decline in the talent pool, the construction industry will need to invest more in its workers’ quality of life, offering more training and skill development opportunities. Another way to help mitigate the effects of the lack of skilled labor is for general contractors and subcontractors to adopt more innovative technology. Technologies such as a preconstruction platform allow them to see potential projects and their projected associated costs and provide them an opportunity to place a digital bid. Doing away with yellow sticky notes and papers that can be lost altogether.

Record Economic Impacts

Aside from labor issues, an equal challenge that has dogged construction since the beginning of the pandemic is the continued breaking of links in the supply chain. Paired with a record boom in the housing market that swallowed up critical supplies such as wood, concrete, and steel, compounded by volatile record pricing, contractors and subcontractors have been pushed to the edge.

Another industry-wide hurdle is skyrocketing fuel costs. In 2022, gas prices soared to $4.99 per gallon. For a subcontractor who owns and operates a small fleet, filling up twice a week costs more than $2,500 a month. Diesel prices saw record-level price increases as well. According to EIA, diesel prices have skyrocketed by 141% since the pandemic began. Thankfully, fuel prices have declined, with the average cost per gallon now $3.19, providing some relief. Material prices have also been stabilized throughout the year, but that does not change the fact that crucial construction materials are still up 16% from a year ago and 41% since the start of the pandemic.

Data as a tool

Construction is one of the slowest industries to adopt new technology, so it is certainly behind the times when it comes to using data as a tool. According to PlanHub’s recent industry report survey, 91% of general contractors and 82% of subcontractors are planning to or considering integrating new technology in 2023. As more construction firms see the advantages of technology, they will be more comfortable relying on it to help them improve their businesses and processes.

Some construction companies are already using automation in construction projects, artificial intelligence, machine learning, information modeling, and analytics to improve their efficiency and safety. As more companies see the benefits of these tools, we can expect that number to grow.

The Future Outlook

The construction industry has and will continue to face many challenges, such as a lack of skilled labor, volatile material pricing, and supply chain disruptions. This will remain true into and throughout the new year. However, the construction industry is stronger and more resilient than ever, thanks to cutting-edge technologies’ rapid adoption. Contractors and subs can digitize critical job information by utilizing the proper construction planning and management solution. This digital integration streamlines key processes, saving a business time and money.

Of course, bidding is only part of the construction process. Contractors and subcontractors need to prove their work is quality and showcase their abilities compared to their competitors. Digital preconstruction platforms allow construction professionals to create extensive profiles about their businesses, allowing for the creation and illustration of a previous project, safety records, licenses, and much more.

PlanHub’s Industry Report

Another factor providing a silver lining to the construction industry is the results we have compiled in PlanHub’s 2022 State of the Industry report. After reviewing the internal platform activity of 26,000 contractors, over 250,000 subcontractors, and an industry-wide survey, the results showed great positivity. According to our survey, 82% of general contractors and 80% of subcontractors plan to grow their businesses in 2023.

On top of growing their business, subcontractors are also increasing their area of service. Since January 2021, the average project viewing distance has increased by 50%, and the average bid distance has increased by 47%. To secure more projects, subcontractors are also listing more trades. Our data shows that over the past year, subcontractors have listed up to 20% more trades in which they work.

As the new year begins, digital solutions can become the catalyst that saves contractors and subcontractors hard-earned money, maximizes efficiencies, and mitigates rising costs’ impacts. By leveraging digital solutions such as comprehensive construction planning and management technology, contractors and subs can better prepare for the challenges ahead by improving their critical business functions and collaboration relationships.

About the Author

Ro Bhatia is the CEO of PlanHub, the leading cloud-based preconstruction platform that enables general contractors, subcontractors, and suppliers to connect and collaborate on construction projects across the US. PlanHub was created by contractors, for contractors, to simplify the construction bidding process.

Category: Industry Predictions

This entry was posted on Wednesday, January 18th, 2023 at 11:39 am. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.