In today’s business world, you must think digital first. Within the construction industry, technology is continuing to change the way buildings are designed, equipment operates and organization’s function.
While slower to embrace a digital transformation than some other industries, recent surveys suggest that contractors are united in believing that technology can help improve productivity and profitability over time.
Current technology options exist for project management, data analytics, artificial intelligence and more. The expectation is that the next 10 years will be a transformative time for the industry.
Through a recently released white paper titled The Future of Building, the Association of Equipment Manufacturers analyzes how the construction industry could transform over the next decade.
“AEM is committed to taking an active role in examining and shaping a shared industry vision for the future of construction so we can offer equipment solutions and insights to help the construction industry succeed,” said AEM President Megan Tanel. “That’s why we brought our construction-based members together to take a look at the coming decade and identify the trends that are changing the industry and impacting construction business owners.”
Citing the $1.2 trillion Infrastructure Investment & Jobs Act, Tanel said there is an opportunity for a generational investment in repair and rebuilding of a crumbling infrastructure.
“Couple that with the ongoing shortage of skilled workers and aggressive goals to lower GHG (greenhouse gas) emissions, and it all points to the construction industry coming to a critical juncture,” she said. “Utilizing the technology and innovation outlined in this white paper will help produce the future society we desire.”
The white paper outlines 10 trends that will have an impact on the construction industry over the next decade. Those trends are divided into three areas: Environmentally Driven Transformation, Transformation of our Industry and Transformation of our Business.
Environmentally Driven Transformation
This area explores how the construction industry will help lead the transition to clean energy, embracing the use of alternative fuels and building the infrastructure needed to repower America.
“Over the next 10 years, construction companies will see their fleets transform, while at the same time building out vital new infrastructure,” said Stephen Roy, president, Region North American at Volvo CE. “We are seeing more demand for construction equipment fleets with cleaner solutions, including reduced emissions and lower noise levels. Construction companies will be critical in the nationwide energy transformation.”
1. Increased regulation of carbon-based fuels spurs adoption of alternative fuel solutions
With the growing trend toward use of alternative energy sources, AEM suggests engine emission regulations will become more restrictive and change the face of construction fleets. California has already banned small gas engines on new equipment starting in 2024. In addition, the EPA has finalized its strictest emissions standards for passenger vehicles and light-duty trucks for 2023-2026 and announced plans for heavy-duty trucks. It is almost inevitable that the regulations will have greater impact on heavy equipment going forward.
2. Renewable energy production booms
Construction companies are likely to play a vital role in the energy transformation. AEM says that while fighting to reduce their own GHG emissions, construction companies will help renewable energy efforts take a significantly larger share of total energy consumption over the next 10 years. Buildings will be upgraded to renewable options and clients will seek companies to work in a more sustainable manner. In addition, AEM says, the entire construction supply chain will play a role in helping the industry meet those sustainability goals as both public and private sector investors request more construction with a reduced carbon footprint.
3. Compact equipment trends electric
Even in 2022, Volvo, Bobcat, Case and others have already unveiled more compact electric equipment. The reduction in noise and reduced emissions is continually gaining interest. The growing electrification trend in landscaping and other realms in both machines and handheld equipment lends credibility to the idea that the construction industry will not be far behind over the next decade.
Transformation of Our Industry
This area explores how the convergence of key technologies will enable the construction industry to make significant advancements in efficiency, productivity, quality and safety. Woven throughout is artificial intelligence (AI) that is the silent technology partner already at work today. It is the expected amplification of these individual elements together with AI that show breakthrough potential.
4. Connectivity leads to jobsite transformation
The combination of all existing technologies is the key to the digital transformation of the construction industry, and the concept of connectivity is what does that. This could involve data from equipment to a fleet manager or from general manager to allow for gains in efficiency and productivity. Tasks that were completed manually will continue to become automated. In addition, cloud-to-cloud connectivity from office to jobsite and jobsite to office will only increase.
“Equipment technology is pivotal to many of these trends coming to fruition,” said Pete Large, senior vice president, Civil Infrastructure Solutions at Trimble. “The cooperation of bringing together all the existing technologies is the key to transformation, and connectivity enables it. Connectivity allows for efficiency and productivity gains throughout an organization and across our industry. This will enable construction companies to solve the safety, labor, efficiency and productivity challenges that they are expected to overcome.”
5. Pathway toward autonomous machinery
Fully autonomous heavy equipment is not anticipated to occur within the next decade. However, there will be opportunities to have situational or moments of autonomy. There are enough repetitive tasks within construction that lend themselves to automation. Although an industry slow to embrace technological innovation, over the next decade, the benefit of automated machines will become clearer.
6. Sensors improve efficiency and safety
Currently, sensors generate telematics data to assist fleet managers in keeping maintenance intervals and monitoring component failures. There are also wearable devices that assist in reducing accidents and monitor movements of workers, detecting falls, breaches of security zones, heat exposure and more. Combined, all these offerings will only improve over the next decade.
Transformation of Our Business
This area explores how construction companies and jobsites become more technology-driven, changing the way projects are staffed, equipment is acquired and data is leveraged. It will begin to take place over the next 10 years.
7. Fewer workers, different skillsets
The labor shortage is not going away anytime soon. By 2031, almost 40% of the U.S. construction workforce, primarily baby boomers and Generation X, is expected to retire. Conversely, the incoming Generation Z (those born after the mid-1990s) is more heavily influenced by technology in making job decisions. Automated or remote-driven equipment will lend itself well to the industry being more inclusive and productive. It will be important for companies to look for a more diverse skillset in hiring their crew members.
8. Business models shift toward subscriptions
The digital transformation is coming to the construction industry. The current model is generally for companies to purchase equipment and then supplement the fleet with rented units to meet varying production needs. A dynamic shift in capital expenditure to operating expenditures is expected. Such a conversion of equipment technology to operating expenses can improve budgeting, estimating and cash flow, while freeing up investment in other areas. Also, some manufacturers, including those relevant to the construction industry, are shifting to an equipment as a service (EaaS) model, giving companies an opportunity to lease equipment for a specified period. Payment is based on output of equipment along with other services that go along with the lease such as maintenance and repair.
9. Construction data will reveal its value
Data stored and utilized by construction companies can be a valuable resource. Telematics assists in creating productivity, quality and profitability due to real-time insight on issues with a machine. In the next decade more companies will benefit from leveraging that data in their decision-making. Also, companies will have more opportunities to benefit from delivery of such data by sharing it with others.
10. Cybersecurity becomes central to corporate strategy
According to AEM, the construction industry is the third-highest industry in getting ransomware attacks. The industry is not alone, as the federal government allocated $1 billion for cybersecurity funding as part of the infrastructure bill.
With the use of phones, tablets and laptops, there is a growing number of potential entry points for cybercriminals. Research shows that 74% of construction companies are not prepared for cyberattacks. It is becoming more imperative that construction companies ensure their businesses are using every resource to deter and detect cyberattacks.
The white paper can be viewed and downloaded from AEM’s Future of Building page.