The Biggest Challenges in the Construction Industry 

The construction industry is facing significant headwinds, with widespread economic uncertainty, rising construction costs, and increasingly complex projects creating a uniquely challenging environment.

But although market conditions have changed, many of the challenges facing construction firms today are all too familiar—and so prevalent and accepted that they’ve become the status quo of working in the industry. While issues can vary depending on factors such as location and scale of projects, a few common challenges get in the way of finishing quality projects on time and on budget.

Inefficient and expensive QA/QC

About half of construction defects can be attributed to human error, according to the International Risk Management Institute, underscoring the importance of comprehensive quality processes. The later in the process a defect is discovered, the greater the impact on project schedule and budget.

When executed effectively, QA/QC processes can reduce rework, prevent costly defects, improve project efficiency, enhance safety, and result in a high-quality finished product that meets (or exceeds) client expectations.  In practice, however, QA/QC is difficult to do well across the site. Manual inspections are fraught with human error, and spot checks can realistically be performed on 20% or less of the site. And no matter how many resources (people and/or money) are put toward QA/QC, the quality of projects will always be in jeopardy when inspections are done with the human eye and a tape measure.

Project viability

With capital-intensive projects that require tens or hundreds of millions of dollars, leaders need to be confident that a proposed construction project is financially and operationally feasible, sustainable, and likely to achieve its intended goals and objectives. 

But a lot of things can get in the way of a viable project. Common obstacles include: 

  • Rework: More than merely tolerated in commercial real estate construction, rework is unspoken but expected, and built in upfront to project budgets and timelines. Across regions and sectors, rework accounts for a significant portion of the total cost (up to 20%) and time (up to 30%) of commercial construction, according to McKinsey, accounting for $273 billion worth of construction errors made each year in the U.S. alone. 
  • Labor shortages: An industry-wide shortage of skilled professionals and craftsmen in building construction has moved from a critical problem to a chronic one. Retirements continue to whittle away at the construction workforce, and the industry will need to bring in more than 342,000 new workers on top of normal hiring to meet industry demand in 2024, according to Associated Builders and Contractors. At the same time, too few younger workers are entering the skilled trades, compounding the challenge. 
  • Overtime labor costs: While overtime can be necessary to meet project deadlines, it can eat into profit margins. Overtime can also lead to fatigue and reduced focus among workers, which can lower the quality of workmanship and cause compromises on quality. 
  • Prefabs that don’t fit: Prefab construction is becoming more popular due to the need for more efficient and sustainable building materials, a lack of skilled workers, and the ability to save time and money, among other factors. But when prefab components don’t fit, it can lead to costly delays, rework, or unwanted compromises.

Certainty to schedule

While firms can take action to manage some things, for example taking steps to avoid rework and ensuring that teams are working off the correct drawings, other things are harder to anticipate and manage. For example, extended lead time for materials, shortages of skilled workers, unforeseen site conditions, and regulatory and permitting delays can be outside the control of the team but nevertheless have a significant impact on schedule. 

When projects go off schedule, it can mean a slower time to hand off the building for the GC and slower time to revenue for the owner, so falling off schedule also diminishes financial viability. By fine-tuning the things they can control and getting access to the right data, teams can avoid delays that result in project compromises, lengthy punch lists, and finger-pointing. 

Uncapped risk

Many contractors, owners, and other stakeholders employ a variety of risk management strategies to mitigate uncapped risk, including insurance coverage, contingency budgets, contract clauses, and thorough due diligence during project planning and design phases.  

Undiscovered errors can be a particularly harmful uncapped risk in construction because these errors can remain hidden until later stages of construction. When they are eventually discovered, they can have severe consequences, including cost overruns, project delays, disputes and legal issues, voided warranties, quality and safety concerns, reputational damage, and loss of revenue.

Eliminate the trade-offs between quality, cost, and time

These challenges have become the norm because until recently, there hasn’t been a true solution. Improving QA/QC has historically meant going over budget or getting behind schedule, just as focusing on schedule can cause teams to neglect QA/QC or blow the budget out of the water. No one has really figured out how to satisfy all three imperatives—quality, cost, and time—without making tradeoffs. 

That has all changed. Today’s tools and best practices are delivering insights and assurance that enable industry leaders to ensure quality more efficiently, overcome the obstacles to project viability, stay on schedule, and minimize risk. Learn how the most innovative developers and general contractors are leveraging technology to overcome today’s toughest construction challenges.

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