Biggest Issues Facing the Construction Industry

The construction industry has seen a lot of ups and downs in the past few decades. However, with the growth of population it seems to act as a good future for the construction industry. As per certain census report the population across the globe is to hit a high of nine billion by the end of 2050. Hence the demand for construction seems to grow. Also, across the world construction is seen as one of the largest industry sectors which accounts for more than 11 percent of the global GDP. Also it is expected to further grow to 14 percent by the year 2020. But apart from focusing only on the positive aspects of the industry one cannot ignore the challenges or the issues which is faced by the construction industry which could ultimately derail the further growth of this industry in the upcoming years.


Shortage of skilled labor: shortage of skilled staff is seen as one of the biggest challenges faced by the industry since during the recession the number of skilled staff dramatically dropped down leaving around 20 percent of the workforce who are currently in their 50s or 60s. This means that there are many people who would be retiring but not enough of them entering in this industry to get them replaced. With more and more projects given the go ahead to be started there should be a greater focus on promoting the careers of those professionals or youngsters who are looking for some kind of change in their career before there is hit to the productivity.

Before the recession which hit the entire globe, the construction industry was divided into two generations, one of which was the traditionalist and the second one consisted of the baby boomers whereas now the scenario is completely different and the workforce is divided into four categories, traditionalist, baby boomers, generation X and the millennials. This poses as a challenge due to the stark differences in the attitude, behavior, outlook and the work ethic between each generation. The traditionalist have left and the baby boomers are on the verge of retirement. By the year 2020 the millennials are known to represent almost half of the global workforce with little or no experience as well as no interest in this industry.

Profitability and poor productivity:  In the current scenario there are low barriers to enter the construction industry. This leads to a saturated market and giving rise to heavy competition in this industry. Due to the growing competition the profit margins are shrinking which results in restricting the essential reinvestment in better and improved technology as well as better business practices. To top it all, stagnant productivity of labor is adding to the challenge. In the other industry sector the businesses have shown profitability due to increase in the productivity of skilled labor. Over the last 50 years or so the productivity in the construction sector has shown not much improvement leaving it to remain stagnant. But the question arises as to why there is stagnation. It has been seen that maximum amount of time is spent on waiting for materials or other construction equipment’s, traveling to the site of construction, laborers taking early breaks, leads to the stagnation.

This productivity issue then reflects in the bottom line where the margins of the companies ideally fall under the bracket of 2 to 8 percent. Also the companies in this sector find themselves stuck due to shrinking profit margins as well as stagnation in the productivity which ultimately leads to difficulty in generating the required profit and also difficulty in investing in newer and critical technology.


Performance of the project:There are innumerable opportunities arising in the construction sector. The companies in this sector are already working under immense pressure with a small profit margin and if there comes any kind of single surprise in the production then it can lead to wiping out the profits for the entire company. Also there is complexity of the designs which adds to the problem. This would mean that as there are new and new designs coming up which are larger than life, they would also require efficiency at that greater level.

This would then become difficult for the construction companies to cope up with. Another issue which arises is lack of proper planning of the project. As per one of the study, there are only 30 percent of the large scale projects in this sector which are delivered on budget whereas 15 to 20 percent of the projects are completed on time. Also there have been cases of underperforming projects in the past few years.

Concern of sustainability: The construction industry is considered to be one of the leading global consumer of raw materials. This industry is known to generate world’s carbon emissions of 25 to 30 percent. Two of the major environmental issues which pose a threat to the construction industry are the change in climate as well as management of water. The major challenge for the construction sector in developing countries which are growing rapidly such as India and China is to achieve targets for the global carbon dioxide emissions reduction.

The only way to reduce the consumption of energy as well as the pollution caused to the environment is by planning smartly and having a sustainable design however it would need a new approach towards management of project. The concern here is that the construction industry is yet not prepared to undertake this change on a global scale.

The increase in digital technologies is creating a big change in the construction industry, providing newer forms of opportunities to address the concerns and challenges of poor profit margin, shortages of skilled labor, concerns regarding sustainability and performance of newer projects in this sector. There are continuous forms of changes in this sector. By the application of the newer manufacturing technologies and the use of best practices would tend to help the companies in this sector to come out with reliable outcomes and also improve the profit margins.