5 Major Problems Facing the Construction Industry

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The construction industry is one of the top adopters of innovative technologies, solving complex challenges for complete lifecycle optimization. Managing construction projects at scale also requires comprehensive oversight, transparency, and communication, which are critical problem-areas that the industry is mitigating against.

Through digital transformation initiatives, construction firms are managing key project risks while controlling overruns and remaining focused on sustainability. They help evolve construction practices over time, enabling developers to deliver projects with greater attention to quality and project longevity. 

Let us explore these five problem areas that developers are focusing on strategically.  

 

Projects experiencing budgetary and timeline overruns

 

Budgetary control is a key challenge that developers face on an ongoing basis. Projects can experience anywhere between 15-25% of cost overruns, based on delays, reworking, and labor issues. While estimates can capture rough cost projections of overruns and budgetary excess, it is important to control these costs effectively to drive greater efficiency. 

 

Construction projects can, on average, experience 20% timeline overruns extending to several years for larger infrastructure projects. By leveraging a comprehensive project management software, such as Depth, companies can prepare accurate project financials, have greater control over dynamic changes, and map key risk areas within a comprehensive management system. 

 

Overruns and delays can also have a significant impact on profitability for projects. Developers with multiple properties within their portfolio will experience profit margin reduction risks when multiple projects experience overruns. It also significantly impacts the timely nature of meeting customer demand to fulfill their requirements for residential, commercial, and industrial projects. 

 

Lack of visibility into project progress

 

Lack of on-ground visibility is a critical challenge that developers are managing through technology solutions. The industry relies on effective progress management to ensure that labor work is not interrupted due to site challenges, lack of materials, equipment problems, etc. 

 

Ineffective project visibility can also contribute to issues with predictive management. Having limited insight into project progress can make it difficult to map processes accurately within an internal process management solution. On-ground teams can improve forecasting, budget control, logistics mapping, and construction work efficiencies by improving internal communication and enhancing project visibility.    

 

Having visibility into projects also ensures that developers can effectively map their roadmap and accurately assess project needs throughout the lifecycle. Consistent communication about progress, indents, delays, and labour productivity, can help enhance schedule adherence. Stage-wise insights are impactful in ensuring timely delivery via streamlined process management. 

 

The inadequate scope within the sustainability domain

 

Sustainability is a key issue that many developers are facing on an ongoing basis, especially with the greater focus on sustainable practices, ecological balance, smarter construction waste management, etc. With the industry contributing close to 38% of direct and indirect CO2 emissions globally, developers need to review their value chain to develop mitigation strategies. 

 

In fact, buildings account for around 40% of global energy consumption and 33% of greenhouse emissions into the atmosphere. Global construction waste is also set to double by 2025, reaching 2.2. billion tons, with few countries actively recycling waste at scale. Sustainability must be at the heart of every construction project, from implementing the right strategies to designing layouts that incorporate sustainable practices.  

Developers can collaborate with the experts in sustainability and develop designs through architectural firms that specialize in sustainable design. The top experts in the domain leverage technology solutions to create design plans that leverage the right materials, layouts, orientations, and energy conservation strategies. They have a significant impact on the output of projects and their potential on emerging future-ready. 

 

Procurement and materials-related challenges

 

Construction costs have risen between 4-10% across categories over the last year due to supply chain challenges, macroeconomic factors, and demand fluctuations within construction projects. Developers are also facing additional logistics challenges in terms of delivery delays, material returns, quality mismatching, etc.  

As procurement is a critical area impacting budgetary, planning, and cost-control, mitigating procurement risks is vital to maintaining profitability. Optimizing procurement through construction technology platforms is a key solution that developers are adopting to improve forecasting, automate supply chains, and enhance project quality. 

 

Procurement-related challenges can also impact processes that rely on scheduled delivery. Labour work, site inspection work, approvals, regulatory compliances, and monitoring processes are based on the timely completion of construction work. Improving procurement can significantly boost productivity for all projects, especially for more complex structures. 

 

Productivity issues within manpower 

 

Productivity is a key challenge in construction projects, especially for large-scale commercial and industrial developments. Ensuring that remote teams are seamlessly connected is critical to reducing overruns and budgetary excess. Additionally, tracking their output, providing training, and managing manhours can become increasingly challenging. 

 

That is why technology plays a vital role in improving worker productivity and construction industry , as it helps centralized data storage, communication, scheduling, workflow management, etc. In fact, increased digitization can aid in reducing the $1.6 Trillion productivity gap that the global construction industry experiences across projects. By leveraging the right solutions, developers can improve productivity challenges through automation, standardization, and streamlined access to project insights. 

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