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Construction Industry Trends to Watch for in 2023 and Beyond

More than three years into the global pandemic, the construction industry is faced with innumerable challenges such as rising material costs, scarcity of skilled workers and material lead delays and shortages. However, most general contractors are planning to grow their business by planning for inflation, revamping their hiring processes and embracing technology. While the construction industry has been historically slow to integrate and adopt new technologies, the need for digital transformation is stronger than ever.

Lowering Cost Without Lowering Quality

In today’s economy, inflation is greatly affecting nearly every industry. The construction industry has not escaped the crushing results of record-high inflation, leaving many contractors worried about what’s to come. The cost of necessary construction materials as well as the labor needed to complete jobs has skyrocketed. The inflation rate for construction jumped to a whopping 12.8% in 2022, affecting both residential and commercial building, hiring and job competition.


When trying to lower construction costs without lowering quality, contractors have several options. When working with residential clients, for example, the size of the project can be reduced to save on materials costs. Contractors can also nudge clients toward stock designs for their projects, utilizing materials that the contractor may already have on hand. Assessing your pricing model to mitigate the risk of potential delays and higher costs will help protect your profit margin. Building with modest designs in mind and working hard to avoid changes in orders can also save money without sacrificing quality build or materials.


Contractors may also wish to shift the systems they have in place for tackling projects or change materials to reduce costs. By considering all possible systematic and/or material solutions to a construction project, contractors may reveal a money-saving solution that may have not been available before, such as choosing vinyl flooring over hardwood, for example. Considering material alternatives or pivoting the way you go about completing a project to save money are both ways to address rising costs during eras of peak inflation. Even with spiking inflation, the construction sector continues to grow, meaning there will be no shortage of jobs in the future. Working to cut costs while keeping quality and workmanship in mind will help contractors survive this rise in inflation and continue to grow their businesses.


Another way that contractors can reduce construction costs is by exploring alternative labor sources. Consider bringing in temporary help or subcontractors to handle some aspects of the job. This allows the contractor to scale up or down depending on the workload without paying the fixed costs of hiring full-time staff. As the industry constantly shifts, contractors need to be aware of the trends and flexible enough to respond to them.


Contractors can adjust their sourcing strategies according to trends. Additionally, networking with other industry professionals can provide valuable insights and ideas for cost-saving measures. Inflation is a challenge that the construction industry must confront head-on. However, by taking a proactive approach and considering various options, contractors can mitigate the impact of rising costs and continue to thrive in a challenging economic landscape.

Hiring the Right Candidates

Talent pressures and shifting talent models are forcing the industry to rethink workforce strategies. Companies are beginning to see that one of their greatest assets is the culture they cultivate in addition to understanding the unique needs of individuals and actively communicating honestly. The days of relying on a workforce to be grateful for having a job or receiving higher pay are over. Moving forward, we will see far more emphasis on hiring—vetting candidates, creating transparency in the hiring process and excellent company culture. As the labor pool tightens, companies need to find ways to effectively bring up talent while restructuring job duties so mid-level or entry-level skilled candidates can succeed long-term.


In this market in which we find ourselves, much of the negotiation power lies in the hands of employees, not employers. Employers must be prepared to make some concessions if they want to fill out their workforce, even if it means sacrificing some qualities they had been looking for or paying a higher salary for a fully qualified candidate.


Providing alternatives to the traditional 9-to-5 workday, such as telecommuting or varying start and end times, is one way businesses can improve their culture. This can be useful in retaining and attracting high-caliber employees who place a premium on work-life harmony. Companies can further demonstrate their commitment to their workers by providing them with possibilities for growth, such as training and coaching, as well as by implementing reward and recognition systems.


Transparency in the employment process is also important for finding and selecting the best applicants. Employers owe it to potential hires to be transparent about what they may anticipate from the position, how long it will take to fill and how they will be evaluated. Having candidates feel more involved and informed during the recruiting process will help avoid any misunderstandings or miscommunications down the road.


In my contractor hiring course, I recommend companies adopt the following five techniques: 1) audit job roles to make sure employees are specialized in their roles; 2) build referral lists by partnering with local trade suppliers willing to pass along your hiring information; 3) offer strong incentives by auditing what candidates really want out of a position (e.g., all local job sites, shorter days, signing bonuses, etc.); 4) constantly recruit through local partners, respected members of your industry and with local trades organizations; 5) utilize creative recruiting tools such as eye-catching videos or social media ads.


Companies need to be on the lookout for red flags as well, such as a lack of passion or excitement. The workforce is in this big transition, and if businesses are not creating and eliciting enthusiasm by creating the right culture, your company may be a red flag for a recruit as well. Other red flags to be on the lookout for are issues with references and candidates solely looking for more money without concrete career goals or plans. If someone has no plans for growth or advancement, they may not stay with you long-term. Large amounts of turnover can put a huge damper on company culture.


The post-pandemic labor shortage has presented a significant obstacle to businesses across all sectors, but its challenges can be overcome with the right strategy. Diverse workforces have higher retention, innovation and productivity levels, which offer both short- and long-term benefits. The key to successfully weathering the labor shortage is to create a workplace that caters to the needs and desires of current and prospective employees—making it more conducive to retention.

The Digital Transformation Is Here

From robotics and drones to analytics and project-building software, to safety QR codes and 3D printing, emerging technology’s impact on the construction industry is undeniable. Construction companies are under pressure to safely deliver high-quality projects on time and within budget despite mounting challenges. While external factors remain outside a company’s control, implementing new technologies can help increase visibility and tackle process inefficiencies.


Developers and contractors are likely to further invest in combined digital and physical technologies such as visual intelligence, sensors, Internet of Things devices, robotics, collision avoidance systems, immersive collaboration, drones and tech-enabled, wearable safety equipment to increase efficiency and protect workers. Companies using all-in-one cloud-hosted software that enables end-to-end workflow estimation for general and specialty contractors have reported boosts in accuracy and productivity due to consistent and standardized estimating procedures. Collaboration software that connects users with data on any device can also enable increased efficiency during project collaboration.


Additionally, prefabrication and modular construction will likely continue to be a key new way of working and delivering projects. These modern construction methods enable more standardization across the building process and allow construction firms to actively address the severe productivity problems affecting construction projects’ quality and pace of delivery.


With the rise of smart cities that are fully integrated with IoT—where infrastructure and buildings collect data to help everything run more efficiently—construction firms will need to be prepared for how artificial intelligence is incorporated into urban communities. Managers will need to maneuver between the physical and technological construction needs as the rate of smart city projects accelerates.


Employers in the construction industry would do well to put money into training their workers in digital literacy as the sector continues to embrace new technologies. Workplace inefficiency and danger could result if workers lacked the knowledge to properly use modern software and devices. For optimal use of these innovations, companies should invest heavily in training and skill development for their employees.


Another consideration for companies as they undergo digital transformation is the potential impact on job roles. While some tasks may be automated, new opportunities for highly skilled workers may emerge in areas such as data analysis and technology management.


2023 and beyond will bring unprecedented opportunities for construction firms to build more efficiently, effectively and profitably. Technology adoption, adapting critical business practices and investing in employee retention are the overriding themes that tie these trends together.

Matt DiBara, the owner of DiBara Masonry, is the founder of The Contractor Consultants. He is the fourth generation of an Italian immigrant-built masonry company that is ranked five stars on Google, Yelp and HomeAdvisor. Known as the “undercover contractor,” DiBara works with celebrity clients and everyday homeowners to provide advice and insight about how to manage construction projects.

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