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Contractors turn to tech to overcome labor shortage

Q4 Construction Index says contractors invest in tech to increase productivity.

BY HBSDealer Staff

Contractors are increasingly turning to technology as an avenue for overcoming the labor shortage.

The Q4 2018 USG Corporation + U.S. Chamber of Commerce Commercial Construction Index (Index) indicates that despite staunch concerns over labor shortages and skilled workers, three-quarters of contractors believe advanced technologies may improve labor productivity on jobsites.

According to the Q4 report, while more than half of contractors currently use technologies like drones, equipment tagging, wearable technology, and augmented or virtual reality for their projects, 74% anticipate adopting such technologies over the next 3 years.

About 58% percent of contractors also reported difficulty finding skilled workers – the highest level reported in 2018 – suggesting that as builders look for ways to contend with a scarce talent pool, investments in technology could help bridge the gap of labor. In fact, if demonstrated, improved labor productivity was reported by 66% of contractors as the top reason for companies to invest in advanced technologies.

“The construction industry has historically lagged behind others in productivity and, when confronted by the labor shortage, there is an even greater need to identify meaningful solutions that will lead to growth and innovation,” said Jennifer Scanlon, president and CEO of USG Corporation. “To achieve the expected growth, it is important that contractors, architects, and designers invest in understanding how technologies like robots and 3D printing can transform jobsites and impact businesses in the near- and long-term.”

Notably, all the technologies included in the study are expected to increase in use over the next three years, but wearable technologies such as sensors are expected to grow the most.

While only 6% of contractors currently report using this type of innovation, the number who anticipate its use over the next 3 years more than triples to 23%. Contractors view wearable technologies as one of the top ways to improve safety (83%), workforce management (56%), and productivity (36%). In general, about half of all contractors consider key project performance indicators like schedule, budgets and safety to be some of the top benefits of investing in technologies.

“From the industrial revolution to the digital age, U.S. companies and workers have helped create and sustain the most dynamic and resilient economy in history. Today, our economy is being rapidly reshaped by technology and other forces,” said Thomas Donohue, president and CEO of the U.S. Chamber of Commerce. “This transformation is creating opportunity, but too many people lack the skills or credentials they need to compete for 21st century jobs and too many businesses can’t find the skilled workers they need. To maintain America’s competitive advantage, it’s imperative that industries and businesses adapt and leverage technology as a way to address workforce challenges.”

Overall, contractors are optimistic about the outlook of commercial construction with an Index score of 75 in the fourth quarter, unchanged from Q3 2018. The Index looks at the results of 3 leading indicators to gauge confidence in the commercial construction industry – backlog levels, new business opportunities and revenue forecasts – generating a composite index on the scale of 0 to 100 that serves as an indicator of health of the contractor segment on a quarterly basis.

The Q4 Construction Index also revealed that the contractors’ ratio of actual to ideal backlog dipped slightly from 81 to 80. The average current contractor backlog was 10.0 months, down from 10.3 months last quarter. The level of overall confidence was 76, increasing quarter-over-quarter (74 in Q3 2018), and revenue expectations remained steady at 69 quarter-over-quarter.

The research was developed with Dodge Data & Analytics (DD&A), a provider of insights and data for the construction industry, by surveying commercial and institutional contractors.

The USG Corporation + U.S. Chamber of Commerce Commercial Construction Index is a quarterly economic index designed to gauge the outlook for, and resulting confidence in, the commercial construction industry.

 

 

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