Construction
The construction industry is the leading and largest industry in the global economy, accounting for a whopping 13% of the world’s GDP.
It has brought about significant changes in our infrastructure and industrial structures, forming the foundation of our economies and becoming essential parts of our lives.
However, in the past 20 years, it has shown underperformance with an annual productivity growth of only a third of total economy averages.
The slowdown in innovation can be attributed to risk aversion and fragmentation, along with attracting digital talent. In fact, digitization is lower in construction than in any other industry.
However, the COVID-19 crisis is expected to dramatically accelerate the changes in the industry that has already taken place in several of the other industries.
In fact, a research done by US management consulting firm McKinsey and Company suggests that construction will be radically different in the next five to ten years as nine specific shifts happen to the industry.
These shifts consist of product-based approach, specialization, value chain control and integration with industrial-grade supply chains, consolidation, customer-centricity and branding, investment in technology and facilities, investment in human resources, internationalization, and sustainability.
The industry has already witnessed a handful of these shifts.
For instance, spending in research and development among the top 2,500 construction companies across the globe has drastically increased by 77% since 2013.
Permanent modular-construction market share in new real-estate construction projects in North America has also grown by 50% from 2015 to 2018.
Many of the construction companies believe that the current crisis will most likely lead to an acceleration of the transformation, with 60% saying that these nine shifts will occur at scale in the next five years.
However, before doing so, all players in the construction value chain need to develop strategies to deal with disruptions, so they can thrive and emerge victorious over the pandemic.
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