In annual Countfire tradition we’ve updated our construction industry trends piece to showcase themes that may affect the industry in 2022. Based on reports of construction industry statistics, and insight from our own team of former-electrical estimators, here’s what to look out for in 2022.
1. Commercial contraction, but growth for residential and infrastructure
Last year we reported that many projects planned for 2020 had been pushed into 2021 due to the uncertainty and restrictions of the pandemic. As we entered 2021 it was still unclear where the industry would go.
Gratifyingly, ONS data shows construction output between February 2020 (pre-pandemic) and September 2021 showed a 34.3% rise in public housing construction as well as a 47.3% rise in infrastructure output. However, this was set against a 27% drop in output for private commercial projects.
This followed a trend of commercial properties being redistributed as residential buildings due to falling footfall and unsustainable business rates. One example is the former House of Fraser building in London’s retail hub Oxford Circus, more than half of which will be turned into offices in 2022.
Suggesting that the industry will likely continue to grow in 2022 as a whole, just with less onus on “bricks and mortar” commercial properties.
2. “Connected construction” to accelerate the industry
Due to the continuation of remote work and restriction on travel measures, more construction companies will increase their digital investment in 2022. Whether to communicate with clients and colleagues, increase efficiency of estimating practices or streamline tender responses, cloud-based tools will continue to help companies feel more connected.
Dubbed “connected construction technologies” these types of digital tools increase the ability of companies to offer a seamless cross-channel experience to their clients. This ranges from collaboration tools, to electrical estimating software, and internal tools such as cloud-based HR, accounting and security systems.
These types of digital tools allow teams to continue to be able to work collaboratively, even when they can’t physically be together, and be able to step in where a team mate has left off, without hours of back and forth.
Adopting the right type of software will help to improve construction estimates as well as seeing peripheral benefits such as increased sustainability through removing paper-heavy processes.
In 2022, we’ll see further adoption of such tools. However certain construction sectors may struggle to adapt.Those working within commercial real estate (CRE) in particular, are concerned about their dependence on legacy technology systems which hamper their ability to innovate. With 8/10 of respondents to Deloitte’s CRE outlook survey commenting that they don’t have a “fully modernised core system” that can integrate well with modern technologies.
3. Supply chain issues continue
The pandemic highlighted issues with global supply chains and in 2022 we’ll likely see supply shortages continuing. This has affected many key construction materials, including concrete, lumber, aluminum and steel.
The general consensus we’ve found in the industry is that it’s imperative to place orders as far in advance as possible once contracts have been entered into. UK firms will want to fix costs with EU manufacturers to safeguard their contract prices as Brexit negotiations continue.
A delay in materials has also increased a delay in projects which, naturally, affects revenue. In a survey conducted by the Associated General Contractors of America (AGC) 75% of E&C firms indicated project delays due to longer lead times or shortages of materials.
4. Widespread work from home adoption to increase residential scope
While many companies are ditching their offices and moving to a fully remote or distributed model, we’ve heard talk within the industry that apartment developments offering hybrid work/live spaces are in demand.
We expect some MEP contractors to make a shift from commercial projects to the cut-throat market of residential work in order to meet this demand.
The outlook for public sector construction is also looking more promising. The public sector is expected to be a major growth driver for construction. In particular, construction of social housing and schools rate high on the agenda for public spending. There is also the promise of increases in NHS capital funding and more construction projects in that area.
As we sign off for 2021, it feels like an exciting time for the construction industry to overcome some of the challenges that have plighted it throughout the past two years of restrictions.
2022 shows great promise for the industry overcoming some of the current challenges and adapting to the more digital future, to create a stronger industry overall.