Like many, the global construction industry was significantly hampered in 2020 by the global pandemic; with projects put on hold and job sites shut, output stagnated and the industry contracted. However, this year has started strongly and initial reports are stating that the industry is on track to grow by five percent, with output currently 2.5 percent higher than it was in 2019. But why is this the case?
It’s a good question, especially when you consider that the construction industry is one where operational process improvements typically take time to be reflected in the outputs. Is it that the workers are well-rested and keen to make up for lost time? Or perhaps as other industries continue to stay shut more people are turning to careers in construction, increasing the size of the labor pool?
On the surface the two above statements may be true, however, the reality is that the industry is gaining momentum because of two driving factors:
- Individual economies and central governments are turning to construction as a way of stimulating their economy.
- More construction companies than ever are embracing Modern Methods of Construction (MMC) such as offsite and modular construction as they’re able to operate even in Covid’s controlled environments, plus they are a quicker way of operating.
But, let’s add some substance to these two factors starting off with the individual economies investing in construction. Azerbaijan isn’t normally thought of as a construction powerhouse, and over recent years the industry there has declined significantly. Global Construction Review found the sector to have declined by 15.2 percent in 2020, 6.1 percent in 2019 and 8.8 percent in 2018, so it’s safe to say construction has not been a growth area in their economy.
However, as the country looks to rebound from the pandemic and diversify into other markets, the central government is predicting a 9.1 percent growth in construction in 2021 achieved by a $1.3bn fund that is looking to do a number of central projects including repairing or rebuilding 2,661km of road networks. But, Azerbaijan isn’t alone. Uganda is another example where they’re looking to stimulate the economy by investing in construction projects and they are forecasting a six percent growth through 2021.
So, while it’s understandable and logical for individual governments and countries to invest in construction to recover from a recession and stimulate the economy, that doesn’t explain how the industry has picked up so quickly.
This is where the second point – MMCs – come into focus. MMCs have been a growing trend over the past five years, with their utilization rates low it had been hard to see them moving from a trend to standard practice, however, the pandemic seems to have changed this and those that are embracing them are now gaining benefits.
A recent round table event held by Construction News, in which IFS participated, discussed ‘Do modern methods equal quality and efficiency’. Emily King, client solutions director at Mid Group, explained how specializing in MMCs made it easier to keep working throughout lockdown. “Because we had MMC solutions, we had fewer people on site, so our [projects] could keep running,” she said. “We closed one site down in the centre of London for a week while we figured out our travel plans, but everything else kept going.”
The reason for this is that MMCs offer a lot of benefits over traditional construction methods. By prefabricating and managing the process in a controlled environment companies can actively monitor and improve their operational processes. In the pursuit of achieving best practice, this goes a long way and would explain how the construction industry has been able to fire up so quickly.
It will be interesting to see how 2021 will continue to develop and if the growing number of construction companies adopting MMCs will lead to the industry continuing to grow.
Interested in learning more? Read more blogs from Kenny Ingram.
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