Lyons O'Neill

Will a changing market spark enhanced innovation?

Whilst the construction and engineering industries made strong recoveries in the first half of 2022, there are multiple headwinds on track to bring new disruption. A shortage of labour, rocketing costs of materials and uncertainty of future investment will make the second half of 2022 and beyond a challenging period for many. But there are also signs it may also be a rewarding one, as the industry looks to be ready to capture growth opportunities and build back better through new means.

The 2022 Deloitte outlook report highlighted the growing disconnect between the growth of the residential and non-residential market segments across Europe. Investment in buildings within retail, commerce and education has bounced back considerably (and notably in comparison to house building), creating a lot of opportunity for providers operating in the non-residential areas of the market.

In addition, challenging times tend to breed innovation. We are seeing a huge number of new initiatives and ventures secure funding and launch products to market. These include: Werk, a hiring and relocation platform for construction talent, which recently raised over $1m; XtreeE, which uses 3D-printing to create everything from walls to bridges; and Hiboo, a platform which coordinates the use of heavy equipment, trucks and vehicles. Pressure creates diamonds, so we’ll be keeping an eye out for a new generation of sector innovators over the coming months.

Key challenges do, of course, remain. Labour shortages and the cost of materials continue to cause problems, with companies having to explore multiple new hiring routes to fill roles and take a dynamic approach to project pricing. In addition, inflation and the cost of living are putting pressure on employers to raise salaries. And ongoing political turmoil in the UK and globally continues to dampen some of the appetite for long-term or high-value investments.

But by absorbing next-gen digital technologies, integrating data and analytics into workstreams, and leveraging end-to-end coordination tools, companies in the sector can look to make operations slicker, more efficient, and more cost-effective. In straitened times, it will be companies with digitally-powered, streamlined operations who can offer commercial viability alongside customer satisfaction.

Whilst the sector has bounced back considerably from the pandemic-induced shocks of 2020, the rest of the year has the potential to be even more dynamic. Forward thinking companies must explore innovative solutions to these evolving challenges.