The 2023 Construction Outlook

The 2023 Construction Outlook

This year is trending to have a rocky first half, but GCs have the opportunity to thrive with the right strategy

January 20, 2023

4 min read

Industry News

Edward Gonzalez

Edward Gonzalez

Founder at Buildr

As we gear up for the new year, we—what the heck—already find ourselves nearly a month into it.

If you think time flies, we’re nearly 3 years (!) removed from the start of the pandemic. In fact, we’re already there if you count the the first publicized cases. We’re 2 months short if you’re counting that day Tom Hanks got COVID and the NBA stopped the season (and our heartbeats).

I preface with bringing up the C word not because it’s en vogue but because construction can’t escape its shadow. Not yet, anyway. All trend forecasts would be disingenuous to not acknowledge that COVID directly affects every aspect of construction now and in the foreseeable future.

The war between Russia and Ukraine, secondarily, has had and will continue to have a massive effect on construction trends. Other concerns for 2023, according to Dodge Data & Analytics chief economist Richard Branch, include relations between China and Taiwan, further escalation of the war in Ukraine, more oil production cuts from OPEC, and a U.S. rail strike—all things that are completely out of our control.

Taking back control

Branch predicts that the first half of 2023 will be a tough one, though a strong banking system and an under-supplied housing market are reprieves.

Even with the Federal Reserve fighting inflation at the cost of the economy, construction will bend but not break. Material prices are continuously improving, with their price peak ending almost a year ago.

Both COVID and the Ukraine/Russia war acted as splashes of cold water in the industry’s trillion dollar face. The economy and the supply chain suffered and continue to suffer, while the much-publicized labor shortage grew more pronounced. These circumstances have created the perfect storm of adaption for construction that has direct ties to technology adoption.

Good technology empowers us do more with less. Many construction firms have had to adopt technology faster than they normally would have, in part because they had no other option to combat their “less.” Whoever was still offline had to quickly get online.

For many smaller and mid-sized GCs, the choice was either adapt on the fly, or fall by the wayside to their more innovative competitors. The enterprise GCs don't have wiggle room for on-the-fly adaptation; all pivots for them are akin to a massive tanker trying to change direction in a storm, and their billions and culturally-ingrained brand make them virtually bullet proof in our lifetimes.

A happy accident of the pandemic and war was the acceleration of the technological revolution that was always coming. How many of your processes had to shift toward implementing new tech or better using a piece of tech you already had and you realized “Wow, we should’ve been doing this sooner?” Even for a tech company like Buildr, the answer is admittedly “multiple.”

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Playing defense

Anticipating the worst and playing defense is how general contractors will continue to survive the current storm and any future one. You hate to admit it, but it’s the survivalist diehards with bomb shelters, astronaut food, and 1,000 packs of Poland Springs that will outlive us all.

Don’t let the labor shortage prompt you to try and over-hire, in part because if you have to lay anyone off it’ll be much harder to rehire once the economy fully bounces back.

Evaluate which parts of your business feel strained or feel like they take up too much of your manpower. Scale workflows with technology where you can so that you can do the most with what you have. Ask around at other GCs what tech has been working for them. Word of mouth was the number one attribution source for B2B in 2022 and that trend will only continue this year.

Diversification is the other must. Healthcare, life sciences, data centers and manufacturing sectors will always have footing even in the face of recession and are trending to do very well in 2023. Prudent GCs pursue work that they can best manage in light of the workforce shortage.

Recession, shmecession. It’s either happening, not happening, or already here. No matter what, your future self will thank you for anticipating it now.

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