Recovery and Future of the Construction Industry post COVID

‘Post-covid’ is a term that we are going to hear a lot now that Freedom Day has passed. It’s also a situation over which very few really have an accurate perspective, whether you’re looking at output and productivity or future trends. But what does that mean for the construction sector today – in terms of recovery and the future of the industry, where do the changes and opportunities potentially lie?

Positive foundations for recovery

There is a lot to be hopeful about where recovery and the future of the construction industry post-covid is concerned. This is a sector built on the firm foundations of a robust situation of supply and demand. Before the global pandemic, the UK already faced significantly higher demand than supply in terms of residential housing and this has not changed. This is a dynamic that will contribute positively to recovery from the pandemic, driving activity in the residential part of the construction sector, especially given changing consumer behaviours such as the desire to locate to more rural areas. In addition to this, technology is now providing many more opportunities for recovery, as well as options for switching to a more agile and flexible streamlined business model in the future. From cloud-based software, which offers greater workflow efficiency, to using drones on-site to minimise health and safety vulnerabilities, there are many ways in which technology can help to deliver on key priorities that will create a brighter future for the sector as a whole.

The role that information management has to play

Another key way in which technology is having a big influence over the recovery and future of the construction industry post-covid is when it comes to information management. Construction businesses can benefit significantly from investing in information management. One recent report identified that for every £1 invested in information management a £6 labour time saving could be the result. And the benefits go much further than cost savings too – more information management can also help the industry to achieve goals in areas like sustainability.

The Value of Information Management in the Construction and Infrastructure Sector report

This report was commissioned by Cambridge University’s Centre for Digital Built Britain and identified a number of ways in which information management could help to make a difference in areas such as productivity going forward. The report could be a key resource in highlighting opportunities that exist for construction businesses to optimise information management when it comes to recovery. These are some of the report’s key findings:

  • Information management doesn’t just benefit one area of the construction sector but has the potential to improve future outcomes for all, from residential to commercial.
  • Businesses that invest in information management can access direct labour productivity gains. The report focused on 11 case studies, which revealed cost savings from the use of information management could potentially be £5.10- £6.00 of direct labour productivity gains for every pound of investment.
  • Cost savings are another big benefit of making information management a priority. These could be anywhere between 1.6% and 18%, depending on the stage of the life cycle.
  • An increase in capital stock. One of the major benefits of greater investment in information management is forecast to be an increase of 0.25% in capital stock in 2051. This is a probable consequence of the 1% productivity boost that information management will facilitate across construction design, build and maintenance.

It’s not just individual businesses that can benefit from information management but the entire economy too. Where businesses are investing a single £1 in the design, construction and maintenance of built assets today this could result in a benefit of £3.70 in GDP by 2051. Given the emphasis on environmental targets and more sustainability – including a greener recovery from COVID – information management clearly has a key role to play. It could be crucial in terms of meeting deadlines for zet carbon zero targets and also with respect to securing more public and private infrastructure investment.

Signs of positive construction output – and a return of confidence

The latest PMI figures reveal that the construction sector is already beginning to show positive signs of recovery and future productivity in the wake of the pandemic. In fact, earlier this year output rose at its fastest pace since September 2014. Confidence in construction is on the up too with one survey finding that confidence in the industry is the highest it has been since June 2015. It’s not just about the residential sector either, as there has also been an increase in confidence in commercial construction (IHS Markit/CIPS UK Construction Total Activity Index at 62.7) and civil engineering (58.0) too. There could be many different reasons for the increase in sector confidence but several have been identified as key right now:

  • Many more projects coming back online. New project starts are increasing in number and generating a spike in employment as well as purchasing.
  • A rise in client demand and momentum, as there is once again renewed interest in construction – and in bringing put-on-hold projects back to life.
  • Robust projections for growth. These are supported by an increase in confidence in the way that the pandemic is being handled, driven largely by the widespread roll out of the vaccination programme.

Key trends supporting recovery and future of the construction sector

  • A continued focus on health & safety as a priority
  • The increased use of remote tech
  • Availability of a much more innovative range of materials, including living materials made from bacteria and fungi and self-mending concrete
  • More modular construction
  • The use of 3D printing of concrete

Many of these trends are positive but there are also a few that could present challenges. Key among these are potential capital disruption from ongoing investor nervousness, as well as changes to supply chains and dealing with any disputes that may have arisen from the shifts of the past year.

In terms of recovery, the construction industry has plenty of challenges ahead but also a strong outlook post-covid, not just in terms of confidence and output right now but also in the years to come.

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