There
are some very serious challenges facing the construction industry that are
motivating new approaches such as 3D rendering and simulation and model-driven
design to how we design, build, operate, and maintain buildings and
infrastructure. While these new technologies are designed to address
challenges in the construction industry, they are going to profoundly affect
other sectors such as operations and maintenance, emergency planning, first
response and urban planning. Below are some of the major challenges:
- Few opportunities: Undoubtedly there is less new construction work happening, both in the private sector (due to lack of available money, investors and certainty) and the public sector (due to government cut backs). Until confidence and availability of money returns, this is unlikely to change. However, as far as public sector construction is concerned, the government does now seem to be investing in some major infrastructure projects in an attempt to kick start the economy.
- Greater competition: A direct result of fewer opportunities is that more companies are vying for fewer projects. Prices are driven down as companies bid lower in an attempt to secure the work.
- Shortage of resources: It seems that, over the last few years, many tradespeople have left the industry and retrained in other careers. This means that companies who have secured work may now have problems in resourcing those new projects, resulting in them either paying a premium for labour or under-resourcing the project; both having a negative financial impact on the organization. It is made worse as these companies want to employ apprentices and train them to be fully skilled, but are unable to do so as tight margins and slow payments leave no spare money to do so.
- Fraud/ethics: A large proportion of engineering and construction companies report being the victim of serious economic crimes. While theft of assets might be regarded by some as an accepted risk of doing business, regulators are taking a hard line on companies who turn a blind eye to these activities. Companies should also be aware of the impact this can also have on their reputation and share price.
- Resolving disputes: The inherent and often unexpected risks on a new construction project present key challenges to engineering and construction companies. For example, if a project is delayed or disrupted, significant resources are engaged and management time consumed. The outcome can have serious consequences on corporate value.
- Relationships with sub-contractors: Construction contractors are under constant pressure to improve margins, reduce costs and improve predictability. Developing long-term relationships with key strategic suppliers is a key part of delivering this strategy. This involves construction companies motivating their contractors to be pro-active, develop new approaches, solutions and work with them to reduce risk.
- Risk management: Construction projects are high risk. They present enormous fiscal requirements and unusual logistical challenges for companies constructing new office buildings, plants or production facilities. Underestimating risk can lead to poor procurement strategy or the lack of skilled resources to actively manage the risk of project implementation may lead to poor decision-making.
