The downturn in non-residential building construction will end, but how soon will the turnaround occur? In what ways will the market be different after the recovery? Following are some of my thoughts about the future.
1. The green movement will grow from childhood to adolescence. The focus on sustainable construction will continue to grow but there will be increasing pressure to move from prescriptive attempts to address sustainability. More focus will fall on improving and documenting the operational performance of buildings. Thought leaders in the sustainability movement will recognize that the best way to improve the performance of a building is not through a series of small changes, but by encouraging a synergy of design and construction professionals developing collaborative solutions early in the design life of a project.
2. The average square footage of construction per occupant will decrease. The trends to sustainable construction, re-urbanization and the environmental sensitivities of the millennial generation will drive smaller per-occupant footprints for residential, multi-story residential and office occupancies.
3. Desire for renovation will continue to grow. During recessions, renovation work typically declines at a lower rate than new construction. When recovery occurs this time, growing emphasis on sustainable construction and the desire to renovate old buildings to improve their energy efficiency likely will drive a continued demand for renovation.
4. The long slide in construction productivity will be reversed. The firms that survive will be those that refused to pursue below-cost bidding practices, instead emphasizing the value of their services. Value-based firms often posess a philosophy that is productivity driven and a greater portion of their building activities will be optimized and implemented offsite.
5. Building information modeling (BIM) will become interoperable and integrated. Embracing open software standards will result in data structures that allow the sharing of information among designers and can integrate the design, detailing and manufacturing processes to facilitate productivity increases through offsite fabrication of components. Truly integrated BIM will spur a greater collaboration between designers, contractors and specialty contractors.
6. The recovery workforce will be less experienced. The rapid increase in construction unemployment to a rate in excess of 20 percent will have a compounding effect on labor problems. Experienced construction superintendents will have transitioned from projects to unemployment to retirement, leaving a major experience void for onsite management of major projects. Layoff rates are highest among design professionals with 5 to 10 years of experience. Who will be the industry’s partners and senior designers in 10 years? The lack of job security will make recruitment into the industry an even larger challenge.
7. Financing of projects will be more risk averse. The long-term result of the recession will be a continued tightening of lending standards. Project lenders will be more insistent on fixed-price contracts with little tolerance for extras or change orders. Contractors then will insist on more complete bid and construction documents. Designers will be faced with the prospect of demanding higher fees for their services or changing their business model to work directly for the contractor in a quasi-design-build delivery model where the contractor can control costs through influencing the design.
8. Public construction will decrease. As attractive as school and publicly funded building construction projects are in today’s marketplace, pursuing them is only a short-term strategy for most firms. History teaches us that periods of increased government spending are inevitably followed by significant decreases in public projects in an attempt to address deficits and high taxes.
9. The competitive landscape will change. Some industry observers have predicted a 50 percent failure rate among design and construction firms during the next two years. Mid-sized firms that lacked the resources and flexibility to downsize will be particularly hard hit. Small design firms and specialty contractor firms will be nimble and innovative with a lower cost structure and will be very competitive for smaller and mid-sized projects.
10. The U.S. market will see more competition from foreign design professionals. Today, U.S. design professionals are applying their skills on overseas projects. As foreign nationals grow in their expertise and begin to compete with U.S. firms for projects in their own countries, they inevitably will identify opportunities in the U.S. market. The ultimate result will be the globalization of the design industry.
Will all of these predictions play themselves out during the coming recovery? Time will tell. Yet, I believe each of these factors should give us pause to consider not just how we survive this downturn, but how we position ourselves for the upturn. The structural steel industry is committed to embrace these anticipated trends with a spirit of innovation and excitement.