There’s no escaping the fierce competition in the modern construction industry.
It seems like firms have kicked that competitive drive up a notch, with nearly every contractor and building professional feeling the pressure to adapt, change, and compete in what almost feels like a brand new world.
Why is today’s construction industry so competitive?
Actually, the construction industry isn’t really more competitive now than it used to be. There have always been a number of qualified contractors willing and able to vie for the available projects in most areas around the United States.
However, a number of relatively recent changes inside and outside the industry have altered the competitive landscape significantly enough that many companies find themselves struggling to stay ahead of the curve. The 2017 Engineering and Construction Trends report by PwC noted the following main reasons behind the change:
- Traditional contracting is becoming more difficult due to the increase in demand for turnkey projects (which force the contractor to take on a greater share of the risk). “Clients in both the private and public sectors are becoming far savvier about what projects should actually cost, and they are benefiting from greater competition for bids. As a result, they can demand LSTK (Lump Sum Turn Key) contracts. We expect this trend to continue and accelerate over the next year.”
- Traditional project definition is also changing, favoring hiring different firms to handle each slice of the project separately. “These unbundled contracts also prevent E&C players from subsidizing weaker and less cost-effective areas of their operation with the profits from stronger areas. Buyers will cherry-pick work from those with the best cost positions.”
- The rise in public-private partnerships (PPP) forces firms to fund their own projects in expectation of future returns. “These changes add up to a different way of working, in which firms assume greater financial risks but also gain access to new potential opportunities. Success requires partnering directly with public-sector entities on an ongoing basis, rather than simply for the construction phase of a project’s lifecycle.”
- Past and future market consolidation. “In a flat market, consolidation is an appealing solution. It will be seen as helping companies diversify and stabilizing their revenue stream. E&C firms will expand their criteria and begin to make acquisitions in new geographic areas and service offerings.”
- Globalization. “Firms in rapidly growing economies have spent the past decade focusing on their home markets, steadily building up cash positions and internal expertise. Now, as growth eases in their home markets, they are expanding outward and seeking to compete against established global players.”
In addition to these trends, the never-ending evolution of technology is like a double-edged sword: On one hand, it offers the possibility of incredibly powerful changes that can empower your business. On the other hand, it can mire you down in endless learning curves and IT nightmares while customers look elsewhere.
How adopting the right tech can be your competitive edge
If you’re a BIM Manager in a mid- to large-sized construction firm, you no doubt also feel the pressure to adapt and change. In fact, when it comes to adopting new technology and operations, your firm likely relies heavily on you to investigate the continually changing tech landscape and make strategic recommendations regarding which direction the company should head.
But, at the same time, that’s far from your only responsibility. So, it’s difficult to find the time to research new technology and make smart decisions. And, of course, handling that job in a halfhearted way is likely to do more harm than good as the company ends up investing in the wrong solutions, wastes time and money, and fails to net a reasonable return over the long term.
A good portion of this article was excerpted from the free eBook, Adapt or Die — Why Adopt Tech Trends in a Competitive Construction Market? Download your free copy, and we’ll discuss how the right cutting-edge technology can make a difference to forward-thinking firms looking to keep up in today’s uniquely competitive construction industry.