The built environment is essential to world economic growth. It drives 13% of global GDP and faces financial risks due to its reliance on government spending, international trade, and investment flows - all highly susceptible to any change in politics or finances. According to reports, the global construction market valued at US$10.7 trillion in 2020 can grow to US$15.2 trillion by 2030. Although this growth is propelled by various megatrends, such as population growth, rapid urbanization, and technological advancements, the sector is under constant pressure to rethink its business models.
The built environment sector has always been under pressure to innovate. But the pace of change is now accelerating, and businesses must adapt, or risk being left behind. Moreover, studies mention that capital projects in the sector take 20% longer to finish and are up to 80% over budget; the resources lost in this process are too significant to let go. Therefore, business leaders and decision-makers in the built environment must embrace human-centric and AI-driven decision-making and new business models to minimize waste, achieve more and stay ahead of the curve.
Economic Adversities in the Built Environment
In the recent past, the sector has faced economic and social challenges, such as resource wastage, labor shortage, poor productivity, sustainability compliance policies, increased demand for infrastructure, and much more. These crises have affected the macroeconomic environment and created an uncertain business environment. Let us understand some of these challenges in further detail:
Labor Productivity - Globally, the construction sector employs 11,77,100 laborers as of 2022, making around 8.7% of workers’ share. But the industry has recorded labor-productivity growth averaging 1% a year over the past two decades, compared with 2.8 percent for the total world economy and 3.6 percent for the manufacturing industry. In a sample of countries analyzed, less than 25 percent of construction firms matched the productivity growth achieved in the overall economies where they work over the past decade. With the growing need for infrastructure, the sector will suffer significant losses if it does not work on its efficiency.
Skill Shortage - Studies have revealed that around 1.2 million construction workers will leave their jobs by 2022, resulting in further labor shortages. Additionally, there will be a need to hire 590,000 new workers in addition to the normal hiring in 2023. To meet this demand, the industry stakeholders must attract & retain the coming generation, and reskill the existing employees.
Schedule and Budget Overruns - Another worry for the industry is the rising cost and mismanagement, pushing the capital projects to exceed budget and schedules, causing resource wastage. Reports mention that only 31% of the contractors managed to keep the project within 10% of the budget, and only 25% could complete it within 10% of the deadline. The causes for this could be multiple, but these delays result in resource loss, which puts enormous pressure on the people, planet, and prosperity.
Need for Efficiency and Sustainability - The sector significantly contributes to global CO2 emission and energy consumption. UN has mentioned that the industry has enormous potential to deliver significant and cost-effective GHG emission reductions. Moreover, it stated that the sector can potentially cut around 84 giga-tons of CO2 by 2050. With increased awareness and policy regulations towards energy efficient and sustainable development, there could be an offset in several materials & industries to follow the compliance and industry standards. Industry needs to be ready for the transition, especially the small and medium-sized businesses that might face difficulties in this shift.
The Way Forward!
The construction sector needs to move beyond traditional processes and business models in order to face of the aforementioned problems and expanding technological breakthroughs. The industry needs to normalize, embrace, and entrust the technology-based solutions for the tasks that could be automated for a better efficiency. This will not only reduce the chances of errors and casualties but will also save a lot of resource wastage by the sector.
To facilitate this shift, there would be a requirement of new skills from the workforce of future to have compatibility with machines. Presently, there is a significant percentage of existing workforce that needs reskilling and upskilling. The industry needs collaborate with academia, other industry stakeholders and upcoming & existing workforce to create opportunities for this transition. These collaboration programs can help bridge the gap between the future workforce and the needs of the industry and can help them develop accordingly.
The built environment will be able to sustain and thrive in this volatile scenario only if we empower the next generation of leaders with the ability to navigate the challenges and seize the opportunities ahead. Are you ready for the challenge?
Hluas – Empowering the Next Generation
Hloov Hluas is a research and innovation platform that empowers the next generation of problem solvers to develop creative solutions for a sustainable future.
Hluas is the perfect place for young leaders to develop the mindset, skillset, toolset, and dataset needed to navigate the challenges and seize future opportunities in the built environment. Hloov Hluas provides a platform where next-generation leaders can Connect, Collaborate, and Create to innovate and reimagine the built environment. The platform offers a unique blend of research, education, and innovation resources, allowing our members to develop creative solutions for a sustainable future.
Learn more about Hluas – /hlʊɑːs/ here >>
