2022 Construction Outlook

Challenges & trends in year ahead

By Sean Clements and Craig Tappel

Shortages of just about everything but work have been coloring the construction industry since 2020 due to upheavals caused by the COVID-19 pandemic. That doesn’t look to be changing in 2022.

Surmounting the challenges to get the job done – on time, on budget and complying with safety requirements – will require construction superintendents to be aware and nimble in making necessary adjustments. That’s not necessarily going to be easy.

Here are the forces you’ll have to contend with in 2022:

No immediate fix for supply chain disruptions

The pandemic, by itself, continues to contribute to materials shortages. Further aggravating things are shortages that are a byproduct of extreme weather.

The lumber shortage that was an issue for most of 2021 is slowly starting to correct. The severe winter storm that put Texas and the Southwest out of commission early in 2021, shut down production of chemicals necessary for roofing membranes. Try finding any today.

One survey found more than 90% of builders citing shortages of appliances and lumber. Another 90% pointed to plywood shortages. Also hard to find: windows and doors, according to 87%.

Such shortages come when there’s a surplus of projects. It’s putting a squeeze on firms that’s interrupting cash flow cycles, and impacting costs, timing and project budgets. Contractors are lucky if they can overpay for materials and stockpile.

Mitigating the disruption will take better engagement with suppliers, building product reserves and developing backup suppliers. Contracts also must reflect cost and scheduling impacts in a way that balances everyone’s interests. A continued imperative: reduced reliance on non-domestic supplies. Supervisors at every level on the job have an important place in the process – monitoring and troubleshooting developments to help even out impacts.

The labor shortage isn’t going away, either

Compounding the materials shortage is the perennial labor shortage. Stack them both up against the continuing boom in projects, and the bigger issue of 2022 will be survival.

The graying of the construction industry workforce intensifies the pressure. The average age of workers is 43; there’s demand for another 1 million in new blood in the next two years. Is pay the issue, when the median is $37.80 an hour? Maybe. The work can be hard and dangerous.

A longer view toward the issue won’t solve the gap immediately, but over time will help narrow it. Many unions are stepping up their paid apprenticeship programs, aggressively conducting outreach to both disadvantaged communities, and also positioning work in the trades as a viable option to taking on burdens of paying for a college education.

Trends reshaping the construction field also are likely to make the work more attractive to new workers. Modular construction, for example, provides the opportunity to practice a trade, whether electrician or plumber, in a protected environment.

Technology’s influence is also huge. The growing use of drones, robotics and digital aids have appeal to – and have boosted demand for – tech-savvy millennials and Gen Z workers. Those are skills that older construction workers may lack. Some firms, in fact, see synergies here worth leveraging through internal training programs matching manually skilled experienced roofers with technically skilled young apprentices.

Construction’s tech transformation continues

Productivity. Efficiency. Safety. Technology continues to have a profound impact on every aspect of the construction industry, and the trend will intensify in 2022.

Consider: Drone use is skyrocketing, with 239% year-over-year increases. “Smart” project management tools make scheduling and budgeting more efficient. Robots and wearable sensors improve efficiency and safety.

The requisite investment will challenge many given the economic turmoil and financial pressures that have accompanied the pandemic. But there’s a lot at stake: The tech evolution stands to improve the industry’s productivity by as much as 60% and deliver as much as $1.6 trillion annually in incremental global value.

For all that technology adds tremendous benefits to how construction work is carried out, supervisors must be vigilant against its downside risks. The more technology is deployed, the more vulnerabilities open up to ransomware, social engineering and other cyber attacks.

 

The challenge to the construction industry and the superintendents who stand on the frontlines, will be the ability to work around all the uncertainties – materials supplies, labor and finances – coloring the outlook for 2022. It will take resiliency, planning and risk management to emerge on top.

Sean Clements is senior vice president for commercial lines at Hub International. Craig Tappell is the chief sales officer for Hub International’s construction specialty practice.

 

Sources:
https://usa.sika.com/sarnafil/en/resource-center/news/supply-chain-update.html
https://www.wsj.com/articles/builders-hunt-for-alternatives-to-materials-in-short-supply-11633512601
https://www.cnn.com/2021/07/08/economy/construction-worker-shortage/index.html
https://www.bls.gov/ooh/construction-and-extraction/construction-laborers-and-helpers.htm
https://www.roofingcontractor.com/articles/93088-reliant-roofing-inc-problem-solvers
https://www.bigrentz.com/blog/construction-trends
https://www.mckinsey.com/~/media/McKinsey/Industries/Capital%20Projects%20and%20Infrastructure/Our%20Insights/The%20next%20normal%20in%20construction/The-next-normal-in-construction.pdf
https://www.forrester.com/blogs/category/cybersecurity/