Every industry faces fluctuations and changes over time. Construction is no different. In the past decade, construction (like nearly every sector of industry) hit a serious roadblock when the economy crashed in 2008-2009. Since the housing crash, residential and commercial construction has been in a steady state of rebound. Other than economic factors, what challenges do construction companies see as they plan for the future this year and in the next decade?
Long-term growth for construction has changed in the past few years, driven in many ways by growth in other sectors of the economy. This growth has benefitted not only residential, but also commercial construction, leading industry professionals to have a brighter outlook for the future (http://www.bdcnetwork.com/4-trends-driving-recovering-commercial-construction-sector).
One of the factors driving this growth is the increase in green, smart buildings. Whereas only a few years ago, the “Green Energy Movement” was confined to smart cars and wind turbines, current commercial construction incorporates structures with environmentally sustainable features, including green building materials. Government standards in construction have changed in recent years to include more products and resources that are designed to reduce the carbon footprint created during projects. This includes materials that are recyclable and compostable.
With business and the economy stabilizing and beginning to grow, large and small construction companies face similar challenges moving forward. Safety is always a concern, as well as being a liability. Insurance liabilities for construction companies remain high due to work-related injuries. Subsequently, construction companies pay higher premiums and usually carry larger policies (http://www.sikich.com/find-solution/industries/construction/construction-challenges). Managing the finances of costs for projects coupled with increasing insurance needs will continue to be challenges for the construction industry in years to come.
Similar to other sectors of industry, a sluggish economy affects the growth and recovery of small and large construction companies. However, as economic indicators suggest, growth is still hopeful. In 2012, growth remained slow yet steady, much the way the classic fable of the tortoise and the hare. Job and market growth saw very small increases, leading some to wonder if the industry lagged behind the overall economy in the recovery process. But over the past year, there has been a steady increase of commercial and residential projects across the country, and even here in West Texas.
Economists argue over the benefit of slow and steady growth for the construction industry in 2014. Some economists cite the effects of the recent recession, which forced many workers to leave the industry to seek other employment. As construction creates new jobs and opportunities at a slower pace than other industries, one positive result is the potential to stave off a possible inflationary period (https://enr.construction.com/economics/quarterly_cost_reports/2013/1202-construction-market-forecast-for-2014.asp).
Politics play a factor in the potential growth as well, similar to the ongoing debates over health care and the overall jobs bill. Despite market indications of a possible greater increase than forecast, political uncertainty remains a challenge that companies will continue to wrestle with as they bid for projects.
The key economic driver for a slow or significant increase continues to fall in residential construction, yet institutional building contracts are expected to be the boon the industry needs for sustainable growth. With new construction projects announced by Abilene area universities, the medical industry, and other business sectors, opportunities abound for construction opportunities in our region.