Downturns, labor shortages and volatile market conditions in construction gripped headlines in 2023. As planning gets underway for 2024, there is an opportunity to learn from the past year to adjust and prepare for what the future might hold. To understand what lies ahead, Procore partnered with research company Censuswide and surveyed more than 1,000 construction professionals across the U.S. and Canada. The How We Build Now Report highlights the results of the survey and provides powerful insights into where construction leaders are making big bets over the next 12 months to future-proof their business.
Analysis of the survey results highlighted five key takeaways and tips to consider when planning for 2024 and beyond:
1. Remain strategic and optimistic.
Ninety percent of survey respondents reported feeling confident about market conditions over the next 12 months, with 50% feeling very confident. Despite economic uncertainty and inflation across the U.S. and Canada, 74% of respondents expect both the number and value of projects completed by their organizations to increase in the next 12 months. This significant business confidence is unique in light of the weak overall economic outlook and may be the result of investments in government infrastructure and public transportation across both countries.
2. Use data to drive business decisions.
Having access to historical project data would help construction professionals make better decisions, according to 43% of survey respondents. They also reported that an average of 13% of total spending on projects can be saved by capturing and standardizing data more effectively. Investing in solutions to remove data from silos and make it more accessible to decision-makers is critical when considering what technologies will be implemented in the future.
3. Tackle project performance and profitability challenges head-on.
Rework remains an issue on jobsites. Construction professionals said that 28% of total project time is spent on rework, while 18% of project time is spent searching for data. These factors significantly impact performance, as nearly half of the projects are reported to be behind schedule and over budget, creating waste and leaving clients dissatisfied.
With project performance in sharp focus, construction professionals are looking at technology to help them improve productivity and profitability. When asked about the factors that would improve productivity within their organization, one of the top answers from respondents was adopting tech to make teams more efficient, along with bringing in contractors earlier in the pre-construction and planning stages of a project and upskilling employees.
Similarly, when asked about the factors that would improve profitability within their organization, the top responses were: 1) simplifying existing tech and processes; 2) making improvements to the way projects are priced to improve the accuracy of estimates; and 3) adopting tech to make teams more efficient.
4. Review and optimize your tech stack.
Owners, general contractors and specialty contractors all reported that they are reviewing their tech stacks and business needs in light of industry unpredictability. Thirty-two percent of respondents reported that they need new technology to help drive operational efficiencies and cost controls in reaction to the economic conditions. Meanwhile, 22% of respondents said they are examining their existing technology to understand what’s working and what’s not.
As construction leaders seek to adopt technology to help them navigate difficult times, digital transformation is on the rise, with owners leading the way. While many seek to become a digital-first business, 26% of respondents noted that they still use paper-based records or non-digital processes as part of their workflows. Looking to 2024, it’s expected that many organizations will continue to make a concerted effort to spur on their digital transformation.
5. Address cash flow and insurance hurdles with data and tech.
Delayed payments have long plagued the construction industry, resulting in cash flow challenges, especially for specialty contractors who have to finance their materials up-front. In fact, 47% of specialty contractors and 39% of general contractors reported experiencing cash flow problems arising from delayed payments. Additionally, 36% of owners said that delays from not getting payments made quickly have cost them money.
While payments is part of the equation, insurance is the other. Fifty-five percent of respondents said the industry can do a better job of leveraging existing data to simplify payments and improve insurance programs.
Managing risk also continues to be a challenge. Thirty-six percent of respondents reported frustration with the time it takes to get construction insurance quotes. It’s evident that moving into the new year and beyond, the construction sector will look to insurance companies to improve their offerings by utilizing operational data to account for the technology-enabled risk mitigation efforts contractors are implementing.
Moving into 2024
The construction industry has experienced its fair share of challenges in recent years, however, the industry is made up of ground-breakers, who turn to innovation in the face of adversity. This grit, coupled with leveraging data and applying new and evolving technologies, means that overcoming economic and industry challenges is achievable.
To dive into the details and learn more about how the U.S. and Canadian construction markets are building in 2024, download the full How We Build Now Report.