Wednesday, July 17, 2024

The Future of the Construction Sector Lies in Innovation

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The UK’s construction sector has seen a bit of a difficult time of late. A slowdown in the number of houses being built, extreme inflation, and delays to infrastructure projects backed by the government have resulted in a significant downturn for the industry.  

Procurement director at Stanmore, Haman Manak, believes that the sector needs to adopt a less conservative approach to its processes if it wants to see profits rise. This means establishing more partnerships with the private sector and incorporating Artificial Intelligence and Machine Learning technologies into daily operations.  

Industry challenges

High inflation rates in 2023 meant that the industry saw a decrease in new housing work. While inflation has decreased, interest rates remain high at 5.25%. As reported by EY Parthenon, rising interest rates remain a primary concern for businesses as they continue to influence a decline in sector work. This, coupled with the industry’s labour shortage, has led to higher builders’ costs.  

Evolving market trends have seen a rising focus on sustainable practices, and the construction industry finds itself needing to adapt. While the upfront costs may be a cause for pause, they can be balanced if a firm implements long-term efficiency strategies.  

According to PWC’s Paul Sloman, the sector is set to experience favourable growth as it moves into 2025, following the slight contraction expected for 2024. As the industry shifts its focus from repair and maintenance toward new builds, its resilience will depend largely on the adaptability of firms and their ability to develop and implement robust financial strategies.  

Additionally, the sector’s ability to evolve and make use of new technologies will greatly influence how effective these changes can be.  

 PPPs: the answer to stagnation

Look no further than the UAE to see the effect that public-private partnerships (PPPs) can have in supercharging the sector. This type of partnership is mutually beneficial: public infrastructure enjoys the advantage of private-sector expertise, and the private sector enjoys a public-scale project.  

The key to success for these projects is making sure that budgets and programs are carefully procured and managed. You need the right contractors on board in order for this to happen. When this occurs, these partnerships are more likely to drive innovation and open new revenue streams, even in environments that may be unfriendly or cash-strapped.  

Exploring PPPs could be a great way for the UK’s construction sector to maintain its recently stabilised state and even drive growth.  

AI and ML

In a competitive industry that has seen its fair share of challenges, the most obvious way for firms to increase revenue is by taking on more projects. To ensure they have the capacity to do this, they need to be more efficient.  

Artificial Intelligence (AI) and Machine Learning (ML) technologies can be used in a variety of ways to decrease construction time, optimise supply chain management and procurement processes, increase the accuracy of structural planning, monitor construction sites, and identify risks before they arise.  

If firms invest in this type of technology, they can reduce the time it takes to complete a project – meaning greater capacity for more projects – and run operations in a more cost-effective manner.  

While the sector is set to face some major shifts in 2024, the overall outlook from industry experts is quite positive. With new tools and shifts in focus, the construction industry is set to experience some exciting changes. 

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