Despite several short-term challenges facing certain sectors, the U.S. construction industry is expected to grow at an annual range of 3.4-4.5% from 2022 to 2025, supported by increased investments on transport, electricity, and broadband infrastructure.
The supply chain disruptions resulting from inflated costs of raw material, lack of skilled labor, and building materials have not significantly affected the stability of the construction industry. While several projects are in their planning phase, others have gained momentum, even with post-pandemic-induced delays.
A few notable trends in the construction industry
- Approximately 1,337,800 new housing units were completed in 2021, a 4% increase from 2020. This growth in the residential construction sector is expected to continue over the next few quarters with a strong demand for bigger homes, low housing inventory, and low lending rates.
- The demand for non-residential construction has declined as new companies have stopped building new offices and other facilities post-pandemic.
- About 4.8% of the U.S. workforce works in construction which is about 7.5 million Americans and continues to grow at a steady rate.
The Infrastructure Investment and Jobs Act (IIJA) and Its Implications for the U.S. Construction Industry
The once-in-a-generation bipartisan infrastructure law, IIJA, holds great promise for the U.S. construction industry. With about $125 billion available for procurement, construction contractors have a lot to look out for.
Some key highlights of the Act:
- IIJA lays special emphasis on public-private partnerships (PPPs), mentioning PPPs 42 times; encouraging such initiatives through lucrative measures to ensure a win-win for all involved.
- It allows a total of $100 million for for advanced digital construction management systems and related technologies.
- It seeks to encourage environment-friendly construction while remediating current sources of pollution and environmental degradation.
- The Buy America, Build America Act (BABA) is part of the IIJA and aims to prioritize the usage of goods, services, or products made or provided for in the U.S.
Changing Weather Patterns to Affect Construction Needs
Several decisions related to project plans, labor and construction timelines, material choices, etc., are often affected by weather and climate. Over the years, the extreme weather conditions and increased frequency of natural disasters have led to significant economic losses, creating more challenges for the construction contractors. Shortage of material and labor, paralleled by increased demand for repair/ renovation post damage, can result in price surges that affect the overall cost of completion. The damage to construction equipment can further delay project completion.
Contractors need to be well-prepared for such uncertainties to prevent a complete shutdown. Identifying unique risk exposures and addressing them in time can help contractors be better equipped to respond appropriately when disaster strikes. Having a risk management plan with safety protocols in place and an emergency action plan can help safeguard employees, equipment, and other valuable assets from damage. The plan should be in writing and include regular safety training, and a clear delegation of roles and responsibilities during emergency situations.
PMC Construction Workers’ Compensation Program
Growth in the construction industry means more workers and a greater need for Workers’ Compensation coverage and risk management solutions. PMC has a specialized Construction Workers’ Compensation program that includes risk management and safety services for construction companies and their employees to be well protected. For more information contact PMC at mailto:info@pmcinsurance.com.
