Five Commercial Construction Trends To Watch In 2016

CaptureA new year brings a new list of construction trends to watch for in 2016. This is the third year we’ve compiled a top trends list and two of the mainstays every year are growth and technology. 2016 will be the fourth consecutive year of construction spending growth and we should be fully back to pre-recession numbers by the end of the year. New technology continues to be trending since it has so many benefits to the construction industry: improved safety, reduced construction costs, better project management and collaboration and greener building material and systems.

Here are the top commercial construction trends to keep an eye on in 2016:

Steady Growth

Construction did better than industry predictions in 2015. According to American Institute of Architects’ Consensus Construction Forecast from January 2015, which is compiled from projections from leading nonresidential construction forecasters, the consensus forecast was for growth at 7.7%. It’s looking like growth is going to be closer to 10% for the year. We predict this trend will continue in 2016 with growth at around 8 or 9%.

Early on in 2015 we accurately predicted construction spending would top $1 trillion for the first time since 2008.  According to the U.S. Census Bureau, total construction spending through November 2015 was estimated at $1,011.9 billion. December’s numbers will be out in a couple of weeks which should put the total for the year between $1.05 and $1.10 trillion. Total construction spending for 2016 will probably be around $1.15 to $1.20 trillion.

On the private side, look for lodging, office and manufacturing to have the strongest growth in 2016. On the public side, we should see states starting work on some of those long-delayed major road projects now that Congress finally managed to pass a long-term spending bill. The five-year, $305 billion plan will fund roads, bridges and other transportation projects.

Labor Shortages

We’ve been talking about a growing labor shortage since 2013, especially for skilled trades. Every month I come across a handful of news reports from across the country about construction firms having difficulties finding qualified workers. The construction industry added 263,000 jobs in 2015, which is about 75,000 fewer than in 2014. Job growth really picked up at the end of last year after a relatively flat summer. In the Bureau of Labor Statistics most recent Job Openings and Labor Turnover Summary reports, there were 135,000 openings in construction at the end of November.

A recent survey by the Associated General Contractors of America on construction industry hiring in 2016 shows that 71% of firms expect to add headcount this year which could be a problem since 70% of firms report having a difficult time finding qualified workers. About half of all firms surveyed have increased pay rates to attract and retain workers and about the same percentage plans to increase investments in training. The good news for those currently working in the industry and those looking to start careers in construction is that they can command higher salaries in 2016.

While there has been an increase in career and technical training programs both in the private and public sectors, there’s still more that can be done. It’s hard to argue that high schools and community colleges should add more CTE courses to their curriculum if the demand for them doesn’t exist. The construction industry needs to do a better job of promoting itself as a place that offers fulfilling and lucrative careers. Most of the folks that left construction during the recession aren’t coming back, having either retired or taken jobs elsewhere, meaning the industry should be looking to typically underrepresented populations such as women, young people and veterans.

Focus on Safety

The number of construction worker fatalities continues to rise. The total number of has increased each of the last three years, going from 738 deaths in 2011 to 874 in 2014. One in five workplace fatalities took place in the construction industry. Part of this can be attributed to a growing workforce as the fatal injury rate has decreased over the past couple of years. In 2012 it was 9.9 per 100,000 workers which dropped to 9.7 in 2013 and 9.5 in 2014. It’s not a huge improvement, but at least that figure is moving in the right direction. Falls are the leading cause of construction worker deaths, making up about 40% of all fatalities. Not surprising that roofers have the highest fatal at 46.2 per 100,000 workers in 2014, up from 40.5 the previous year.

If that’s not enough incentive for firms to take a long hard look at their current safety training and programs, OSHA is expected is expected to increase fines by as much as 75% this year. This is due to a provision in the budget bill passed last year that would allow a one-time catch up adjustment with subsequent increases tied to year-over-year inflation increases.

This means that the current maximum penalty for a willful violation or a repeat violation would increase from $70,000 to $122,500. Maximum penalties for serious violations and other than serious violations would increase from $7,000 to $12,250. OSHA has been prohibited from increasing fines since 1990, and the agency has been pushing to increase penalties for year.

OSHA is also expected to issue final rules that will impact the construction industry early in 2016. These include rules on occupational exposure to crystalline silica, tracking of workplace injuries and illnesses as well as updating national consensus standards eye & face protection. A proposed rule on crane operator qualification in construction is also in the works.

We’ve already discussed how firms are having a hard time hiring workers. Having a bad track record on safety is bad for business. Firms should start the year right by performing an audit of their current safety program to identify what measures are working and which ones need improvement. Take the time now to beef up your safety program and you and your employees will reap the benefits all year long.

Technology Use Becomes Vital

The days of managing a successful construction business, regardless of size, with pen and paper or Excel spreadsheets are dwindling. Projects are becoming increasingly complex and deeper collaboration among all parties involved is now a necessity.

Software, cloud and mobile solutions are available for nearly every task associated with managing a construction business. These include estimating/takeoff, invitations to bid, projects scheduling and management, accounting, Building Information Modeling (BIM) and prequalification of subcontractors.

BIM adoption is still not where it probably should be as we head in to 2016. We strongly believe BIM is the future due to the level of collaboration it enables on a project in addition to being able to save time and money by allowing conflicts and issues to be eliminated in a virtual model before physical construction begins. BIM will also eliminate a majority of the time spent by estimators doing takeoffs and estimating.

Expect to see more investments in construction startups and for research and development in construction technology this year. Firms like DPR Construction, Caterpillar and Zachary Construction all made investments in startups last year and firms like Skanska and Bechtel have impressive R&D divisions.

You should be constantly seeking out new technology that can benefit your construction business whether it be software, mobile solutions, Light Detection and Ranging (LiDAR), drones, 3D scanners and printers, augmented and virtual reality, BIM or wearables. Other technology to keep an eye on in 2016 is autonomous heavy equipment and construction robots as well as more connected devices and buildings systems that make up the “Internet of Things” for building automation.

The Sustainable Standard

Green construction continues to evolve and occupy a larger market share in the industry. Green and sustainable construction is outpacing conventional building construction. A couple of years ago we were talking about out how net zero energy buildings would be the next big thing in green. While the market for net zero is still relatively small, we expect it to grow as demand increases. California is requiring all new residential projects, both single and multi-family, to be net-zero starting in 2020, followed by new and renovated state government buildings in 2025 and all new commercial buildings in 2030.

California isn’t the only place establishing net-zero requirements, All 10 campuses at the University of Hawaii are expected to be net-zero by 2035 and federal buildings are looking to go net-zero by 2030. Even though the evolution to net-zero is still in its infancy, we already are talking about the next step which is net positive energy buildings that actually produce more energy in a year than it uses.

Advancements in solar technology are helping make buildings greener, as are the use of geothermal power and wind turbines that are being implemented in the design of buildings. Rainwater harvesting and graywater and blackwater treatment plants are helping reduce water consumption. Improved LED lighting and double-skin façades are helping reduce energy consumption.

Expect to see more greenery on rooftops, verandas and inside buildings in the future. Other trends in green building to watch for include collaborative and shared spaces and mixed-use buildings to reduce transportation needs. More walkable and bike-friendly communities will also be popping up this year.

Well, that wraps up our top trends to watch for in 2016. Others worth keeping an eye on include alternative construction methods like prefab, modular and 3D printed buildings. Collaborative consumption, often referred to as the sharing economy, and crowdfunded construction are a couple of other trends worth keeping an eye on this year.

One Response to “Five Commercial Construction Trends To Watch In 2016”

  1. NoBodee January 15, 2016 at 10:21 AM #

    If BIM is going to move into prominence, Architects will have to do a MUCH better job of defining the actual physical conditions of their designs.
    Current standards of practice in the Architectural Profession do not demand the level of accuracy and completeness that is necessary for the proper budgeting of real-world construction. And the way case law reads, an Architect’s performance is judged against the “usual and customary examples of practice” prevalent in their geographical area. This means that if all the Architect’s in a particular region routinely leave out pertinent information (like Deck Height) or carry forward inept designs or specifications from project to project to project (despite all attempts of concerned Contractors to inform them of their errors) they are not to be found remiss in the performance of their duties. Since all the Architects in their region perform at this same low level of competence, their performance is found acceptable under the rules of Standard Practice.
    But when full implementation of BIM enables the Architect to publish their own list of quantities and they extend their reach further into the Construction Process by providing materials directly to the Job Site via direct Owner Financing, they will be required to perform at a MUCH higher standard of accuracy than I have ever seen. These additional aspects of their professional practice will require them to spend more time programming, specifying (correctly), sourcing, pricing, planning and scheduling than they currently do (and which they are not currently qualified to do). Furthermore, all of these tasks are currently performed by the Construction Contractors at relatively low office-worker wage values. But, because Architects will naturally want to charge their higher professional rates for these additional “value added” services, the Owner will eventually wind up paying more up front for less efficient service on the back end, while the Business of Contracting will become even less profitable than it is now. (Slavery is the natural, historical outcome of such cultural trends.)
    These deficiencies in the BIM implementation model will no doubt be overcome someday by advances in technology, but as yet, these advances await the implementation of a different attitude on the part of the Architectural Profession. All too often Architects specify incorrectly, design poorly, miss things, or leave-things-out-on-purpose using the phrase “Contractor’s Means and Methods” to push responsibility for real world implementation of poorly expressed Project Requirements onto the Construction Professionals (who are supposed to serve the Owner on an equal footing with the Architect).
    This roguish practice will have to stop.
    IF BIM is to succeed and promote widespread growth of all players in the US Construction Business, Architects will have to go back on their century and a half old decision to separate themselves from the rights, responsibilities and fortunes of the Owners and Construction Contractors they cooperatively serve.
    Otherwise our market will probably be taken over by international companies that do not share our better sensibilities about the freedoms we strive to preserve in this land of Liberty.

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