‘Managing risk in the Digital Age, a survey recently conducted by the Associated General Contractors of America Management, confirmed that almost 90% of contractors have faced risks related to shortages of skilled workers, while 67% have dealt with risks related to a dearth of qualified supervisory staff.
The Associated General Contractors of America (AGC) is the leading association for the construction industry. AGC represents more than 26,000 firms, including over 6,500 of America’s leading general contractors, and over 9,000 specialty-contracting firms. More than 10,500 service providers and suppliers are also associated with AGC,
The study focused on contractor perceptions of risk and how they believe the engineering and construction industries will change in the future. More than 90% of contractors reported that the design documents they received were less complete than in the past, and 40% of respondents said they planned to move design services in house. Of those, 80% had already completed the shift or planned to do so within the next three years. Nearly 67% of contractors surveyed said the industry was going to change more in the next five years than in the past 50, but most construction companies said technology had not forced fundamental changes in their businesses, and less than 20% said it was “aggressively disrupting their business models.” However, companies that believe great change is on the construction industry horizon are six times more likely to innovate across their businesses, according to the study.
Contractors also responded that many of the risks they face today are not insurable like more traditional risks having to do with automobiles, workers’ compensation and finished products, so they are looking to the risk management industry to evolve in order to meet their needs, which could include professional liability insurance for design services and coverage for drones.
The sector has also made a huge leap in the technology arena, with the market offering up only one or two apps in 2011 compared to today’s more than 2,100.
Building information modelling (BIM) has also made great strides. Even technophobes value BIM’s assistance with clash detection and other solutions to cumbersome problems, giving contractors the opportunity to identify design errors and omissions before they become expensive in-field repairs or redesigns. Once the territory of large general contractors, BIM has become useful and attainable technology for subcontractors as well.
A second survey confirms other challenges facing construction businesses, despite growing demand for services. The Telematics Benchmark Report: Global Construction Edition released by Teletrac Navman, confirmed that managing costs (49%) remains the industry’s biggest challenge. However, issues around finding, retaining and developing talent have grown significantly from last year, with more than a third (35%) of businesses affected, up 13 per cent on 2017.
The industry’s growing focus on risk management and compliance has also resulted in a more respondents facing challenges around minimising vehicle/driver incidents (23%), up 6 per cent; managing risk (21%), up 7 per cent; and regulatory changes (17%), up 10 per cent.
Despite these challenges, the construction industry is expected to grow at 4.2 per cent from 2018 to 2023and to be worth $15.5 trillion globally by 2030. In line with this, over half of respondents (59%) said they expect to grow fleet sizes next year to cope with rising demand for services (56%). This echoes the research by ACA Research, which found that 60 per cent of Australian construction firms will increase fleet sizes next year.
The survey also revealed the extent of the current labour shortage, technology disruption, and economic optimism, in addition to several other key trends.
Rising global demand is leading to labour shortages and higher costs, with payroll dominating company expenses as firms increase pay and offer greater benefits to attract talent.
• Finding, retaining and developing talent is the biggest planned business investment (42%), with just under half (49%) saying that increasing material and labour costs was their biggest concern.
• Organisations are addressing the labour shortage by increasing pay (50%), offering better benefits (35%), and providing flexible working arrangements (29%).
Construction firms are turning to technology to manage issues, improve efficiency and results
• After talent, upgrading fleets (37%), integrating technologies and systems (33%), installing more efficient GPS tracking (26%), and implementing technology for regulatory compliance (22%) are key investment priorities in the year ahead.
• More than three quarters (79%) of respondents are using telematics, with 55 per cent reporting fuel savings as a result (12% fuel saved on average). In Australia, ACA research has found that nearly one third (29%) are using telematics, with the construction industry having the second highest intention of using telematics in the next year (37%), of the seven industries surveyed[iv].
• The reasons for deploying telematics include: vehicle/equipment tracking (76%), tracking speed (62%), hours driven (58%) and distance (47%). Reducing idling (39%) and fuel usage (32%) were also key drivers.
Early adopters are reaping rewards, with a range of benefits from fleet management technology
• The top reported benefits of telematics included: peace of mind/knowing where vehicles are (57%); improved driver behaviour (34%); more efficient routing (24%); and cost savings (19%).
• Construction firms have also already embraced mobile technology, with 58 per cent of business offering it to their drivers, operators, and fleet managers, to enable more direct communication (57%); easier fleet tracking (48%), and easier reporting (46%).
Commenting on the findings, James French, Construction Equipment Solutions Specialist, Teletrac Navman Australia, said: “The construction industry has long faced pressures to do more with less, while also ensuring the safety of its workers and profitability of the business”.
“With costs rising, it’s no surprise that many construction fleets are turning to modern technologies, such as telematics, to find efficiencies. Firms also reported a notable upswing on 2017 in facing challenges around regulatory requirements and compliance. This suggests that new laws such as the upcoming changes to the Australian Chain of Responsibility legislation are top of mind for many construction companies. We’re committed to supporting the industry by helping them understand and navigate these market shifts,” Mr French continued.