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By: Kendall Jones on May 12, 2022

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4 Major Challenges Facing the Construction Industry

Operating Insights

It’s an interesting time for the construction industry. Growth has been strong the past several years, with U.S. construction spending now at an all-time high. Despite having weathered the storm of the Great Recession, the construction industry is still facing challenges, both old and new, moving forward.

Rising material and labor costs, labor woes, increased competition and shrinking profit margins are some of the challenges construction firms face. There’s also new rules and regulations that business owners must stay on top of like new OSHA rules or changes to building codes or the recent tax reforms.

Here are some of the major challenges facing the construction industry today:

Labor Shortages

The construction industry lost over a million jobs from February to March 2020 due to the COVID-19 pandemic and . Many workers either retired or were laid off and found employment in other industries. As the recovery continued, it was clear that these workers, now in new careers, were not coming back.

The bottom line is the construction industry is not attracting enough talent to meet growing demand. A recent survey by the AGC finds that 75% of firms expect to add headcount in 2018 and that 78% of firms are having trouble finding qualified workers. In addition, 82% of firms expect it to remain difficult, or get harder, to find and hire qualified workers in 2018.

About 21% of employees in the construction industry are age 55 or older, compared to just 9% that are 24 or younger. Workers in construction are aging out and retiring at a faster rate than the younger generation is coming in. Tech-savvy millennials aren’t flocking to careers in construction as past generation have, which will continue to cause issues for firms as they seek to meet growing demand. The lack of diversity and the uncertainty of immigration reform will only make matters worse.

On a positive note, the construction industry managed to add 241,000 jobs in 2017 compared to just 190,000 in 2016. Construction firms have done a good job of creating in-house training and apprenticeship programs as well as collaborating with state and local governments to create programs designed to attract and train new talent for careers in construction. This trend will have to continue as labor shortages will continue to be a major challenge for firms for years to come.

Stagnant Productivity Levels

Unlike other industries, construction has seen little to no improvement in productivity over the past eight decades. A recent report from McKinsey & Co. finds that “While many U.S. sectors including agriculture and manufacturing have increased productivity ten to 15 times since the 1950s, the productivity of construction remains stuck at the same level as 80 years ago. Current measurements find that there has been a consistent decline in the industry’s productivity since the late 1960s.”

Those findings are troubling, especially as construction projects are becoming increasingly more complex. There are a number of factors that lead to poor productivity on construction projects. These can be due to inadequate planning and scheduling, lack of collaboration and communication between stakeholders on the project, idle time wasted by having to wait on materials and supplies to be delivered or for prior work to be completed.

The labor shortage also has played a role in hindering productivity in recent years with workers not having the skills or experience needed or by companies trying to do more work with fewer workers. Fragmentation in the industry from working in silos also is a major contributor to the lack of improvement in productivity levels over the years.

Construction methods like design-build and lean construction practices which require a high level of communication and collaboration among key players on a construction project have been proven to improve efficiency and productivity on projects. Technology such as building information modeling (BIM) and project management software are also tools that contracting firms can use to bolster productivity.


Worker safety continues to be an issue plaguing the construction industry. For years, construction has led all industries in the total number of worker deaths. The number of workplace injuries and illnesses has remained constant for years. Keeping workers safe and protecting them against accidents and injuries should be the top priority for all business owners.

The median time away from work after suffering an injury or illness on the job in construction is 10 days. Of the 82,760 accident injuries involving days of work missed in 2016, 26,010 of them involved 31 days or more away from work, which works out to nearly a third of all accident injuries requiring days away from work. That’s a massive amount of lost productivity due to injuries and illnesses.

Training is the number one way to keep workers safe on the jobsite. Safety training shouldn’t be a one-time event. Ongoing training is needed throughout a worker’s career to emphasize the importance of safe working practices and to reinforce the lessons they’ve been taught. There’s no such thing as too much safety training.

Accidents are easily preventable when hazards have been mitigated and safe work practices are strictly and vigilantly enforced. Safety starts at the top and companies that have strong safety programs have been shown to be more productive. A commitment to safety can improve a construction company’s reputation and attract top talent by showing an interest in the well-being of its employees.

Technology Adoption

The construction industry, as a whole, is notoriously slow at adopting new technologies. Countless studies and surveys over the years have shown that business owners continue to underinvest in technology, despite their acknowledgment of the many benefits that technology can provide to running their business and managing construction projects.

BIM, telematics, mobile devices and software applications have all been in use in the construction industry for a number of years. Emerging technologies like VR and AR, robots, drones, 3D printing, the Internet of things (IoT), wearables and autonomous vehicles are all being adapted for use in the construction industry.

Ironically, many of these technologies can be used to help address these other challenges the construction industry is facing. BIM, VR, project management software and mobile devices can help with scheduling and planning as well as communication and collaboration which can lead to better productivity.

Drones and wearable are being used to monitor workers and keep them safe. VR is being used to train workers in safe environments and robots and autonomous equipment are allowing workers by alleviating some of the more strenuous tasks they are required to perform while also removing them from some of the more hazardous areas on construction sites. Companies that are adopting new tech also have a leg up on attracting more millennials to come and work for them.

We are quickly reaching the point where technology is going to be a critical component of all construction projects. The companies that are early adopters and are implementing new tech into their workflows and jobsites are going to have a noticeable advantage over those who don’t. Companies that fail to see the advantages of technology or continue to underinvest in these tools won’t have the competitive edge to survive in this rapidly changing environment.

ConstructConnect offers a range of software solutions to help you manage bids, find projects, and grow your network in the commercial construction industry.

About Kendall Jones

Kendall Jones is the Editor in Chief at ConstructConnect. He has been writing about the construction industry for years, covering a wide range of topics from safety and technology to industry news and operating insights.