By Mark Drury, Shapiro & Duncan
2019 is drawing to a close, and with it, a deluge of hopes and predictions about what 2020 will
bring. Particularly for the construction industry, there are several clear opportunities for growth
in the months ahead. Planning now can help make sure your organization maximizes these to
your full potential.
5 Top Factors to Watch in 2020
While we can’t know the future, there are some certainties that we don’t expect to change
anytime soon. Being aware of these forces allows you to strategically develop a plan to combat
and add in flexibility for what may lie ahead as well as understand the areas for opportunity.
The ‘Top 5’ factors to watch across the construction industry, now and into 2020, include:
– A continued workforce shortage. This is a trend that affects all industries, nationwide
and is expected to continue in 2020, largely fueled by lack of qualifications among
unemployed workers for available open jobs.
– Increasing prices . In tandem with workforce shortages, prices will climb as demand
exceeds capacity. The key reasons for this are risk on the part of leadership and second,
on overtime costs, particularly if property owners want jobs done within a certain time
period and the construction company has a smaller pool of workers to accomplish it.
– Delayed project starts. Rising prices mean rising budgets for property owners. As a
result, owners generally like to ‘shop around’ to see if they can get a lower quote
somewhere else and this takes time. Start dates can be pushed depending on how long it
takes for a project’s budget to get solidified.
– Company failure. It’s a natural part of the economic system that all companies do not
succeed. As the economy changes and evolves, we are starting to see larger numbers of
organizations fail, and the usual cause is they took on more capacity than they could
execute. This again is a likely trend that will continue into 2020.
– A residential construction bubble. Current situations indicate that over-building in the
residential sector could signal a coming bubble. July, 2019 broke the record for housing
starts – previously held by July 2007- which has some experts anticipating a slowdown in
the market and potential layoffs on the residential side of the construction industry. This
also leads to opportunities for the commercial side of the business as talent will be freed
up and infiltrating new projects, which can be a positive development.
Diversity is Key
One tried-and-true path to success is to diversify your client and market base to maintain a
substantial backlog of projects. This ensures that you will have a steady stream of demand and
opportunity, no matter the market conditions. Areas like Washington, DC that have a large base
of different markets, from the federal government to healthcare to biotech and others, are less
likely to feel dramatic effects of a market correction than regions where the labor force is largely
dependent on one company, industry or institution. For organizations that have the majority of
their client ‘eggs’ in one industry ‘basket,’ now is a great time to focus on diversifying and
branching out to serve new markets and areas as a key growth vehicle.
Market Outlook – Continued Growth across Several Industries, from Data Center to
Healthcare and More
Going forward into 2020, there will continue to be growth in a number of key industries, the
largest being data center, healthcare, defense spending, higher education, and K-12 sectors.
Conversely, high-rise residential real estate and retail industries, such as shopping centers and
malls, are likely to experience continued slowdowns. Of the growing areas, the data center
market holds large potential, although due to the risk-averse, sensitive nature of the work this
area also tends to be very exclusive and difficult to penetrate. Keeping apprised to these other
growing areas can be a wise way to steer your company’s sales and lead generation strategies
into 2020.
Best Practices – Tools for Success
So how do you take all of this information and use it to your company’s best advantage in 2020?
Here are some best practices to make sure you’re positioning your company to succeed in the
year ahead:
– Know your capabilities and keep it real. Be realistic about your goals, limitations, and
potential of your workforce and be careful not to bite off more than you can chew
project-wise;
– Planning is everything. Create a master schedule of your project backlog to allow you to
proactively anticipate the ways you will apply your resources and leverage your talent;
– Keep your eye on the bottom line. Understand where your costs are and where they are
escalating;
– Build your talent pool. Your talent is the core of your business, and essential to its
ongoing success and growth. Continue to hire and strive for the best; and
– Train and educate your people. The decision to invest in your company and your
people is one of most advantageous you can make over the life of your organization.
They are the life-blood and the future, and it’s a good idea to treat them accordingly,
whether through professional development opportunities, mentoring, team-building, or
other activities.
2020 – Full of Innovation and Opportunity
Despite the bluster from different corners of the market, 2020 looks to be a year brimming with
innovation and opportunity. Remember, keeping a realistic view of your goals and making a
proactive plan for success are critical elements to ensuring your company grows successfully,
whatever the market brings.
About the Author
Mark Drury is the Vice President of Business Development at Shapiro & Duncan. He brings
more than 40 years of experience in construction management and oversees the company’s
corporate development, contracts negotiation/management, and production of marketing and
sales materials. Mark is a past Chairman of the Board of ABC Metro, is a LEED AP and
Designated Design Build Professional. He completed his undergrad studies in History at
Shepherd University and graduate coursework at Princeton and Clemson Universities. For more
information about Shapiro & Duncan, please visit www.shapiroandduncan.com.
