Construction Industry Trends: May 2019 Roundup

Rising construction costs, data security concerns and the perils of project mismanagement highlight some of the most interesting stories we read in May. Here’s a look at some of those stories — and the issues we’re paying close attention to.

Construction Costs Spiked 5.7 Percent in 2018, Big Data to Play Larger Role

Construction costs, always in the forefront of contractors’ minds, rose 5.7 percent in 2018 according to the First Quarter 2019 North American Quarterly Construction Cost Report put out by Ryder Levett Bucknall. The U.S. cities seeing the biggest jumps in construction costs were Chicago (7.6 percent), Portland, Ore. (7.1 percent). San Francisco and Phoenix tied at 6.7 percent. The report notes an increasingly prominent role of big data in construction, pointing to a new consortium of technologists and urban designers called Sidewalk Labs — a subsidiary of Google-Alphabet. They are exploring how leveraging new technologies and big data can help solve large urban challenges. One of the keys to this initiative is developing a framework for how data is used and addressing data security issues. The report also notes that construction labor and worker safety remain top industry challenges to overcome.

The Takeaway:

The role that big data, data analytics and business intelligence will play in the construction industry’s future is unmistakably huge. And it’s especially important as contractors race to control construction costs. It’s great to see more strategic approaches to developing the right frameworks and benchmarks for construction’s digital, analytical shift. By adapting the latest construction technologies and embracing true construction business intelligence, contractors can produce safer, more efficient, higher-quality projects, while growing beyond what have been historically razor-thin profit margins.

Concerns over Drone Security

Speaking of data security issues, a recent Construction Dive article notes concerns over the possibility of Chinese-made drones sending sensitive information to manufacturers — and perhaps the Chinese government as well. The U.S. Department of Homeland Security (DHS) issued a May alert in its Cybersecurity and Infrastructure Security Agency memo noting that some drones “contain components that can compromise your data and share your information on a server accessed beyond the company itself.” The memo also noted that Chinese drone manufacturers are under “stringent obligations … to support national intelligence activities.” The article noted that a 2017 Skylogic Research report indicated that 79 percent of the drones currently in use in the United States and Canada were manufactured by Shenzhen, China-based DJI. The company, however, said its customers are given complete control over how their data is collected, stored and transmitted and that its technology was independently verified by the U.S. government.

The Takeaway

With drones being increasingly used in construction, this will be an issue to watch. On one hand, the construction industry — and U.S. businesses in general — are still getting hands around data security in the digital age, which means breaches and misuses of data remain a constant possibility. On the other hand, the benefits that drones can bring in terms of collecting and sharing valuable construction data between the field and office can have a significantly positive impact on construction projects of all sizes. As long as contractors have solid data security measures and best practices in place (e.g. don’t rely on drones to process critical proprietary or financial data), then drones shouldn’t be shelved.

Mistakes, Lack of Collaboration has Hong Kong Rail Project Contractors Blaming Each Other

And now speaking of China, the South China Morning Post reported that missing documentation, miscommunications and conflicts between contractors and unauthorized work were all contributing factors that led to shoddy and defective work at the Hung Hom Station tunnel in Hong Kong. The work at the station, part of a larger HK$97.1 billion (US$12.3 billion) project to improve the Sha Tin Central subway link, has brought about an investigation by MTR Corp. which runs Hong Kong’s mass transit railways. The general contractor, Leighton Contractors, fired back at allegations it was to blame for the poor work, instead calling out one of its subcontractors, Wing & Kwong Steel Engineering. At the root of the issue was a length of the tunnel that had a number of areas where rebar was not connected or properly installed. Leighton admitted there were miscommunications about material types, but argued the subcontractor failed to perform its duties. Adding to the problem is a number of missing documents that could show where miscommunications or responsibilities lied. The MTR Corp. is now also looking into at least three other sections of the project that might be subject to shoddy work.

The Takeaway:

This is a messy, intense situation that no contractors wants to find themselves in. It’s a prime example of why true, real-time collaboration and documentation on projects is so important. By utilizing today’s modern construction software technologies, contractors can take advantage of the collaborative environments that the cloud brings to the table, with instant updates of real-time information, workflow alerts, documentation audit trails and more. This way, when problems like wrong materials, incorrect work or missing documents are noticed, all parties get informed and these solutions force issues to be addressed. Of course, mistakes will always happen in construction, but if contractors are relying on manual processes or outdated, disconnected softwareand not realizing them until it’s too late, it can be a very costly gamble.

Private Group Complete Section of Border Wall

This Memorial Day, a private group that has raised more than $22 million via a GoFundMe campaign, announced it had completed the first part of its own section of a controversial wall along the U.S.-Mexico border. The group, We Build the Wall, is headed by an Air Force veteran whose advisory board is chaired by former White House strategist Steve Bannon, has been vocal about its mission to build a border wall. President Donald Trump, meanwhile, has largely been stymied by Congress in his own efforts to secure billions of dollars in federal funding for a significant stretch of border wall in Texas. To date, just under $1.4 billion has been allotted for repair or extension of border wall near the city of El Paso. We Build the Wall said it is already gearing up for “section number 2” of their own wall project, returning to the private donor well to seek additional funds via social media. Debate over the need for a border wall has been one of the most polarizing issues in American politics in recent years, with some saying it’s vital for national security and others calling it a waste of taxpayer money to fuel anti-immigration agendas.

The Takeaway:

Regardless of which side of the fence you stand on, does it seem like there might be too many different cooks coming into the kitchen? This is just the latest in a number of efforts by private groups over the years to build their own sections of border wall, bringing up debates that range from public-private land use, to environmental and ecological concerns to substandard construction. In some areas of the border, which stretches from Texas to California, mere chain link fence serves as the divider. In others, 15- to 20-foot-tall sections of cement loom over the border. This is one construction project that has never enjoyed a uniform, strategic approach, and the likelihood of multiple contractors spending years and years of costly rework and repairs seems high.

Contractors today know the feeling of too many cooks in the kitchen as projects get bigger and more complex, with an increase of people involved. Learn more about how modern construction technologies can help streamline processes, simplify work and net better, more profitable results.