Five Commercial Construction Trends to Watch in 2017

Happy New Year! Now that we’ve bid adieu to 2016, it’s time for the construction industry to start focusing on what’s in store for the year ahead. A new year brings a new list of commercial construction trends to watch for in 2017. Continued demand for construction combined with nagging labor shortages will continue to impact a majority of construction firms. We’re also coming off an election year and with every new administration, companies will be concerned with how new policies and agendas will affect their industry or directly impact their business.

Here are the top commercial construction trends to keep an eye on in 2017:

Improved Growth

ConstructConnect’s forecast for total construction put in place for 2017 is $1,234.5 billion, a 6.3% increase over 2016. The improved growth is expected to carry over into 2018 where construction spending will improve another 7.2%. Total residential construction spending is expected to grow 7.4% in 2017 to $501.7 billion and total nonresidential is forecast to increase 5.5% this year to $732.8 billion.

This is welcome news because construction spending growth slowed in 2016 compared to the previous two years. According to ConstructConnect’s Chief Economist Alex Carrick, total construction spending for 2016 is expected to grow 4.4% to around $1,161.4 billion. This is well below the 11% growth we saw in 2014 and 2015.

The latest report from the U.S. Census Bureau had total construction spending for the year through November at $1,070.9 billion. This is right on track to hit or exceed the forecasted 4.4% increase over 2015 assuming nothing crazy happened in December.

The industries expected to see the largest growth in construction spending this year are Office at 12.9%, Healthcare at 12.6% and Lodging at 12.4%. It’s not good news for all industries as construction spending for Industrial/Manufacturing is expected to decrease 7.2% in 2017.

Highway and street construction spending is forecast to increase 6.4% this year after seeing a slight decrease in spending last year. This is due in large part to the passage of the Fixing America’s Surface Transportation (FAST) Act at the end of 2015. The FAST Act was the first long-term funding bill for federal surface transportation projects in over a decade and will provide $305 billion over a five-year period. It came after 36 short-term stopgap measures to keep the Highway Trust Fund from going insolvent.

It will be worth keeping an eye on whether President-elect Trump can get his 10-year, $1 trillion infrastructure spending plan fleshed out and approved by Congress. Remember, it took Congress over 10 years to get the current long-term funding plan in place and it covers only half the time and a third of the amount Trump is proposing.

Actual details on funding his plan are scarce, but according to his website the plan is to “Leverage new revenues and work with financing authorities, public-private partnerships, and other prudent funding opportunities and harness market forces to help attract new private infrastructure investments through a deficit-neutral system of infrastructure tax credits.”

Technology

Technology will continue to play an important role, both on and off the jobsite, in 2017. The hottest technology trend for construction this year will be the use of augmented reality (AR) and virtual reality (VR). Last year we saw a number of new VR headsets hit the market like the HTC Vive and the Oculus Rift. More are on the way this year like the new model from Lenovo which will be lighter, cheaper and have higher resolution than both the Vive and the Rift. The new Lenovo headset will also provide room-scale virtual experiences and motion tracking in a self-contained unit.

Better project visualization, enabling and improving real-time collaboration among stakeholders and leading to increased adoption of Building Information Modeling (BIM) applications are just a few ways the construction industry will benefit from AR and VR technology. VR will be used more on the design side by architects and engineers while AR will have a larger presence on the construction site. VR will see some use by construction firms in areas like safety training and teaching workers how to properly operate heavy equipment in a controlled environment.

VR will be used more on the design side by architects and engineers while AR will have a larger presence on the construction site. VR will see some use by construction firms in areas like safety training and teaching workers how to properly operate heavy equipment in a controlled environment.

Expect to see more drones flying and hovering over jobsites in 2017. The Federal Aviation Administration (FAA) finally issued rules for commercial use of small unmanned aircraft systems i.e. drones that went into effect last August.

Even before the new rules were released, the FAA was granting exemptions for commercial use. A large percentage of exemptions granted covered applications in aerial surveying, construction and infrastructure. Drones can be used to do aerial surveying of a site, monitor worker productivity and safety and conduct inspections on bridges and tall buildings.

Another technology trend to watch this year is the presence of autonomous construction vehicles and heavy equipment. Leading manufacturers like Komatsu and Volvo CE continue to release new models of autonomous, semi-autonomous and remote-controlled excavators, bulldozers and other heavy equipment. Royal Truck & Equipment has been doing pilot tests with the Florida DOT for self-driving crash trucks for work zones. Two of the major benefits of this technology are safety and the skilled labor shortage. With these machines, you can put a less skilled worker in the cab and the equipment will do almost all of the work.

Connected devices through the Internet of Things and incorporated with heavy equipment telematics, RFID tracking on tools and supplies and the technology previously mentioned will help the industry be more collaborative, efficient and safe.

Modular Construction

Permanent modular construction, sometimes referred to as offsite construction or prefabricated construction, is poised to have another great year in 2017. Modular construction has been around for decades, it has just recently started to attract interest for commercial construction applications. This is partly due to some high profile projects in the last few years. Owners are also coming around to the fact that modular construction can look just as good as onsite construction and be completed in a shorter amount of time and for less money.

This is due in part to some high-profile projects in the last few years. Owners are also coming around to the fact that modular construction can look just as good as onsite construction and be completed in a shorter amount of time and for less money.

Last year we say the world’s tallest modular construction project completed with 461 Dean, a 32-story residential tower in New York. While that project was not the best example to tout the benefits of faster and cheaper, it did garner tons of media attention as it neared completion. Other projects like the 142-room AC Hotel going up in Oklahoma City are proving that modular can be done cheaper and faster and look just a good as traditionally built structures.

Offsite construction is suited for a number of structure types from schools, dormitories and hospitals to office buildings, hotels and retail store. Modular buildings are built to meet existing building codes, can achieve LEED certification and because they are built in controlled environments can be safer than a traditional construction site.

The Modular Building Institute estimates that modular construction holds about 3% of the market share of new construction and expects it to grow to 5% by 2020.

Labor Shortages

This is one trend that I’m sure no one in the construction industry wants to see continue in 2017. Unfortunately, things will probably get worse this year as more and more firms struggle to find workers. The phrase “It’s so hard to find good help these days,” will be painfully appropriate as the construction labor shortage continues to plague the industry.

Last year you couldn’t go more than a couple of weeks without coming across a news story from somewhere in the country reporting on local labor shortages. The Associated General Contractors of America (AGC) reported back in August that more than two-thirds of construction firms are having a difficult time filling hourly craft labor positions.

In 2016, the construction industry added only 102,000 jobs. This is down from the 296,000 jobs added in 2015 and the 362,000 in 2014. While the numbers for November and December are still preliminary, and could be revised up, the industry went from adding an average of 30,000+ new jobs a month to adding only 8,500 a month jobs in just two short years.

The latest Job Openings and Labor Turnover Survey (JOLTS) report from the Bureau of Labor Statistics (BLS) for October shows there were 205,000 openings in down just slightly from the 221,000 in September. That’s still a lot of unfilled positions for an industry that managed to add just 28,000 jobs in the last quarter of the year.

Areas that will be hit hardest are the ones with the highest demand for construction. Labor shortages are driving up construction costs since firms are having to offer higher wages to attract the talent they need. Some companies are having to turn down work because they don’t have the workforce to complete the job. In addition to driving up construction costs, the shortage will lead to longer construction schedules.

Safer Jobsites

Whether safer jobsites is a trend we will actually see in 2017 or merely wishful thinking on my part is still up in the air. With OSHA hiking up their penalties by 78% for violations last year, it should be a strong deterrent for construction firms to flout safety rules.

The current maximum penalty for a willful violation or a repeat violation increased from $70,000 to $124,709. The minimum penalty for willful and repeat violations rose from $5,000 to $8,908. Maximum penalties for serious violations and other than serious violations jumped from $7,000 to $12,471.

The recently released 2015 Census of Fatal Occupational Injuries (CFOI) from the BLS had construction again leading all industries in the number of construction worker deaths. Both the number of total worker deaths (937) and the fatal injury rate (10.1 per 100,000 full-time equivalent workers) increased in 2015.

In the construction industry, the four leading causes of worker deaths, known as the Fatal Four, were falls, being struck by objects, electrocutions and getting caught in/between objects. The Fatal Four were responsible for 64.2% of all construction worker deaths in 2015.

Falls – 364 out of 937 total construction worker deaths in 2015 (38.8%)

Struck by Object – 90 (9.6%)

Electrocutions – 81 (8.6%)

Caught in/between – 67 (7.2%)

There was an increase in total construction worker deaths for each of the Fatal Four in 2015. Maybe 2017 will be the year that construction firms make a true commitment to protecting workers and reducing the number of serious injuries and worker deaths. If the industry can improve the image of their track record on safety it will go a long way in helping to attract more workers to construction.

OSHA is also in the proposed rule stage for crane operator qualification in construction and making amendments to the cranes and derricks in construction standard this year. The agency’s latest regulatory agenda also plans to start the prerule stage to address noise in construction and preventing backover injuries and fatalities.

Here’s wishing everyone in the AEC industry a safe and prosperous 2017.

8 thoughts on “Five Commercial Construction Trends to Watch in 2017

  1. All aspects well covered including use of drones for pre And post construction activities.AR and VR are new force multipliers while labour shortages will drive automation.

  2. Labor shortages – what a bunch of crap – too bad they won’t consider a retired 65 year farmer with a NCSO and lots of experience running and maintaining equipment and mentoring young people to do the job right !

  3. As 2017 walks on, the construction business is certain to embrace new technologies and more effective business practices to battle the proceeding with test of the worker shortage and the instability of another presidential organization.

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