Four trends to watch

FMI, management consultants and investment bankers to the construction industry, identifies four major themes the industry will face in the coming decade:

1. Significant changes in the funding for infrastructure. Current funding will not meet expected needs. The Highway Transit Fund will have a $4.3B deficit by FY 2009, resulting in a $27.3B highway program. The primary funding vehicle (gas tax) is losing purchasing power. Highway construction materials prices are currently up 43% from 2003 and total highway costs, labor and overhead are up 27%.

2. Demand driven by demographics. Growth and congestion are becoming issues of national priority. The cost of travel delays and wasted fuel is currently estimated at more than $67 billion annually. System capacity is considered imperative to remain competitive in the global marketplace – China and India are making tremendous investment in their transportation infrastructure.

3. Competition for scarce resources creating “hyper-competitive” markets. Topping the list of scarce resources is labor shortages. The pool of skilled labor/field management/project managers is shrinking. This is the top issue identified by contractors. In 2008 alone, there were 6 million more jobs than employees and this number is expected to exceed 10 million by 2012. Basic materials such as cement, aggregates, hot mixed asphalt and ready mixed concrete are becoming scarce commodities as well.

4. Technology infiltrating construction in ways that matter to contractors. How will this look? Technology will play a larger role in mitigating workforce shortages, attracting “techno-wonks” to the industry, solving interoperability, construction conflicts, flattening hierarchical organization and changing management from art to science. Your comment?