In these times of national (or global) uncertainty and volatility, traditional ways of planning a successful pathway into the future for a construction business can no longer be counted on as reliable. So, where do business owners and CEOs turn for their strategic inspiration and direction? How do they step outside of their own ‘points of view’ and see the marketplace data and emerging trends with a fresh eye, while still retaining their gut instincts? By tapping into the collective wisdom of other leaders, more specifically, those who have survived and thrived despite having encountered multiple cycles of bull and bear markets over the decades.
In interviewing owners of construction companies, who each have 30 or more years of experience in leadership positions, we found a picture emerges from the perspectives offered. This should hardly be surprising when you consider that the owner’s viewpoints are based upon the data they have at their fingertips, and which they are most likely immersed in on a day-to-day basis. Those who truly understand this data, use it, and then act accordingly tend to thrive. Conversely, those who don’t understand the data typically either make the wrong decisions or fail to act, and their businesses naturally don’t survive the volatility of the industry.
Whether you are a construction industry insider or not, you it is clear to see that the industry continuously evolves and adapts to the changing market conditions it faces. Some have referred to the current construction environment as a “bi-polar market”; where different sectors are facing radically different conditions but are all overlayed with a high interest rate/inflationary environment and the ongoing challenges of finding and retaining skilled workers. Where might we find emerging opportunities?
The current construction market presents a unique set of opportunities for construction companies which can position themselves to take advantage of the emerging trends. Here are some of the key opportunities these leaders see in the near-term:
Infrastructure is a critical area of focus for governments and private organizations around the world. As existing infrastructure continues to age and decay, new infrastructure is needed to support population growth. There is a tremendous demand for construction companies which can deliver quality infrastructure projects. Construction companies that can provide innovative solutions, use cutting-edge technology, and operate efficiently are well positioned to win such infrastructure projects and thrive in today’s economy.
Sustainability and Green Building
Sustainability and green building practices are increasingly important to clients, investors, and communities. Construction companies which can integrate sustainable solutions, such as energy-efficient buildings, renewable energy and green infrastructure are in high demand. This trend is likely to continue as more governments and organizations around the world implement policies to reduce carbon emissions and mitigate the perceived impacts of climate change.
Modular and Prefabricated Construction
Modular and prefabricated construction is gaining momentum due to its ability to offer cost savings, faster construction times, and reduced waste. Companies that supply modular and prefabricated solutions are likely to see strong demand in the current market. Additionally, the COVID-19 pandemic accelerated the demand for modular solutions due to the need for social distancing and reduced on-site labor. The ability to reduce on-site labor remains a competitive advantage for any construction company in the post-pandemic market conditions.
Renovation and Retrofitting
As the demand for sustainability and energy efficiency increases, the need for renovation and retrofitting of existing buildings is also on the rise. This trend, coupled with rising interest rates and increasing retraction of capital, leads to a “fix-it” vs “buy/build new” mentality. Companies which champion market leading re-design and repurposing of commercial properties in addition to the high-quality renovation and retrofitting services are likely to see strong demand as building owners seek to improve the performance and longevity of their existing assets. Hold times and carrying costs play a significant role in how these properties will pencil for investors, so the construction companies with these skills will carve out a specialized and profitable niche.
Technology is still transforming the construction industry and will continue to do so. The companies which leverage technology to improve efficiency, productivity, and quality are in a strong position to succeed. Examples of the technologies now transforming the construction industry include building information modeling (BIM), drones, 3D printing, and virtual reality. Construction companies that can provide these innovative solutions are likely to both win more business and improve their profitability.
To summarize, despite concerns about volatility and macro-economic uncertainties, the current construction market presents several key opportunities for the construction companies which can provide innovative, sustainable, and technologically advanced solutions. By focusing on infrastructure, sustainability and green building, modular and prefabricated construction, re-design, renovation and retrofitting, and technology, key construction companies can position themselves for success.
While this is a prescription for a thriving and healthy construction company in today’s market, it is also important to note that the construction industry is a highly competitive shifting and evolving marketplace. Successful companies must remain alert and be prepared to endlessly adapt and innovate to stay ahead of the competition.
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Peter Gray – COO, Construction and Real Estate Practice Group Lead
Peter brings years of comprehensive operational management experience to our clients seeking guidance and surefire methods for top operational performance. He helps business executives to develop and grow their businesses by offering expert ways to implement their operations, finance, growth, and service/product management. He helps companies to integrate innovative methods and strategies, so they function effectively.
Peter seeks out business challenges as his ambition is to find the opportunity within them and make the most of them with a team dedicated to success. Clients rely on him to provide reliable, innovative, and cost-conscious strategy execution, project management services and solutions to fulfill their business objectives.
Jim Barnocky- CFO, Construction and Real Estate Practice Group Lead
Jim brings financial leadership and guidance to clients to ensure they achieve growth and success. Leveraging his business degrees, years of executive experience, problem-solving abilities and fintech expertise Jim helps owners establish, develop, and optimize financial standards and strategies to ensure their long-term success.
Jim coaches and mentors clients on all financial aspects of their businesses from bookkeeping to executive level planning and forecasting. Jim prides himself on being able to see both the ‘forest and the trees’ for an organization, and has decades of experience optimizing processes, creating efficiencies, and improving cashflows for numerous clients.