CCA Conference Blog: The Changing Face of Construction: How to Adapt?

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The Changing Face of Construction and how to adapt to it was topic at the first session of the day at the 94th annual Canadian Construction Association conference in Savannah, Georgia.

Stephen Damp, Al Miller and Geoff Smith were the panelists sharing their experience of adapting with a rapidly changing industry.

In the last five years, there have been massive changes in the stresses, issues and priorities of civil contractors, Stephen Damp said.

In the civil world, Damp said, civil work is virtually all owned by the government sector, and that would likely not change. In 2007 and 2008 the dominant discussion was the labor shortage, and everything else was incidental in comparison.

The world financial crisis caused anxiety across the industry, and while there was still work in the industry, people were worried as to what was to come.Those three years in the US were radically different in the US in the civil sector compared to Canada. The stimulus package also buoyed the industry during difficult times.

But in a three year run, the stimulus program slowed down and backlog was cleared, and there was massive “margin shrinkage” in the industry.

Foreign competition became a factor because we were one of the few countries actually funding infrastructure. It was a bigger factor in larger, more complicated projects and the P3 world.

Damp sees several key issues going forward, such as projects, margins, workforce challenges, implementation of technology advances, and client expectations are rising like never before. There are far more multi-scope projects than ever before, Damp said, which is causing a crossover of comfort zones.

Damp also said there’s been a big increase in P3 projects, and he thinks we’ll just see more design/build and P3 as time goes on.

Low margin environments are very stressful, Damp said, but “good margin” work is hard to find, and the industry will have to adapt.

Workforce changes are a huge challenge, he said, and skill-matching shortages are rampant. Finding the right person for the right job is becoming more and more difficult.

Technology advancements such as project management, BIM, electronic bidding, design and even equipment control are all factors which are changing the industry, and Damp said the technology advancements coming into civil work will help with labour and productivity issues but it will be a long term effort.

Damp does not see current stresses going away anytime soon, and sees more specialization as time goes on. Those who adapt will do well, because clients in the end will pay for people who can deliver.

Al Miller gave his views from the trade contracting perspective. He said contractors are becoming commoditized, and he said in order to survive they needed to diversify. They also needed to bring a lot more value to the end user, and they found technology was a major stress point for clients. The clients didn’t understand tech, so Miller said he was able to add value by becoming a trusted adviser to end users looking for help with energy management issues.

Sustainability is becoming a major issue and building life cycle is also becoming an emerging issue.

Going ahead, projects are getting bigger and companies going after those projects will need more resources and just to be bigger companies, Miller said.

In order to avoid margin compression, subtrades need to either grow their company or specialize, Miller said. Miller also pointed to prefabrication as a way to take work off the job site and really streamline the process.

Geoff Smith gave his perspective to from the general contracting side. He said the “great consolidation” is here, with significantly fewer general contractors in the next five years. US contractors are competing with Canadians directly, as are the Europeans, and in order to compete we will need to pick up our game.

American companies are far better and more aggressive at marketing themselves compared to Canadians, Smith said.

Chinese companies are also driving costs down, Smith said.

Smith said the business model of the last 50 years has fallen apart. Everyone is competing with everyone now, he said.

Labour relations isn’t changing, but Smith said he wishes it would. Labour relations laws were drafted in the 1970s for a world that existed in the 1960s, he said. This is a big threat, Smith said, and there needs to be a restructuring.

In terms of communication, social media has been a big boost, Smith said. A press release about Ellis Don being one of the “best companies to work for” got very little interest in newspapers or on their web site, but they got 500 hits in 48 hours on ..dFacebook and 11,000 hits on Twitter. Social media is a business tool, he said.

Smith also said video will be a driving force in new office buildings, with conference calling and presentations affecting building design in new ways.

Project management systems are core, Smith said, not a tool. If you don’t control your data, you don’t control your business, he said.

Smith also said it’s important to redefine leadership in the construction industry. He suggested that leadership needs to be turned upside down and that its important to look at those you work with and not let them down.