As often as people say COVID-19 is unprecedented, it’s not the first time in recent memory that industries have been dealt a possibly unrecoverable blow.
During the Great Recession, the construction industry faced decisions not unlike the ones faced now with post-coronavirus business recovery. The results of those decisions may determine which construction businesses survive and which thrive in the wake of COVID-19, offering lessons to leaders in other industries. Here are five insights from construction restarts, both then and now.
1. Learn From the Past
The Great Recession, which for the construction industry was 2006 to 2011, left a lot of change in its wake. It also left a lot of shuttered companies.
Some businesses held on, resisted change, and managed to squeak out survival. Other firms, however, took the downturn as a time to invest in both their employees and core business operations. They invested in new technology and innovative processes and spent resources on training and upskilling their teams.
Then in 2010, the introduction of the Apple iPad set into motion an explosion of technology exploration for construction, as new apps enabled enhanced collaboration between the office and the field. On the other side of the Great Recession, these newly innovative companies saw a massive influx of the use and adoption of those technologies they had just embraced. And they thrived.
For example, BIM (Building Information Modeling) was in its infancy at the start of the recession. Dodge Data and Analytics’s 2012 Smart Market Report found that BIM implementation across the architecture, engineering, and construction industry grew from 28% in 2007 to 70% in 2012. At the time, Dodge Data and Analytics Senior Director of Industry Insights Stephen Jones said, “Though it may seem counterintuitive to increase spending during a recession, the research indicates that the industry is continuing to invest in a more efficient and productive future by embracing technologies and processes of BIM.”
Firms that took the time to learn and implement BIM and field-collaboration tools in their work practices were among the first ones hired when the economy began to rebound. That’s because companies were looking for smarter and more innovative approaches to better manage risk and enable more predictable outcomes. According to Harvard Business Review, a recent study of 3,500 companies found that those that took companywide measures to prepare for the downturn, including tactics such as the adoption of digital tools, saw revenues grow four times larger during and after the Great Recession.
Firms that failed to take advantage of the opportunity to transform in 2008 could be paying a higher price now. Many won’t survive this latest blow.
2. Think Vertically
Companies that elect to thrive rather than merely survive disruption often capitalize on opportunities for growth. Soon, the construction industry—but more broadly in other industries, as well—is going to see firms plucking up other firms. There will be an increase in mergers and acquisitions. This happened with the Great Recession. It will happen again with the coronavirus crisis. Why? Vertical integration leads to more control and better margins.
Some traditional construction-management and general-contracting firms will merge and/or add layers to their businesses, such as architecture, engineering, fabrication, or even commercial development. This shift to more vertically integrated business models makes sense: You can control the supply chain, project-planning process, and outcomes yielding higher returns. Plus, the margins get even better the more you’re vertically integrated.
In lieu of traditional mergers and acquisitions, some firms may consider partnerships with new or unconventional players. Recent examples from the past year—such as JLL’s partnership with Google to create an artificial-intelligence office assistant, Fluor’s partnership with IBM Watson, and Skanska and IKEA’s expansion of modular-home developments in the UK—demonstrate how firms can fortify their businesses by expanding or transforming service offerings.
3. Take Creative License With Inspiration
COVID-19 has accelerated the use of technologies that were already enabling firms in an array of industries to innovate and reimagine the way they use technology and data. For instance, the new-project creation rate in Autodesk BIM 360 Design jumped approximately 350% globally since working conditions shifted from office to home in mid-February 2020. But with some construction projects halted for an extended period, many tools and technologies across all industries are being used in new or unexpected ways.
“Construction professionals are natural problem solvers, and leaders will need to extend grace to allow for this innovation and creativity to flourish without fear of failure.”
For example, virtual inspections with 360-degree cameras and video walk-throughs are keeping projects on schedule. Site-monitoring cameras, drones, and even Boston Dynamics’s robot dog, SPOT, are helping to keep every member up to date on a project, even if they’re not physically on-site. Integrations between Zoom video conferencing and BIM 360 can streamline the meeting-minutes process and keep teams organized. A combination of streaming presentations, prerecorded video, and 4D animation are enabling social-distancing-friendly groundbreaking ceremonies. Although not every construction milestone can move to a digital workflow, this pandemic has shown that many of the industry’s common practices are ripe for disruption.
This kind of revolutionary thinking can come from almost anywhere. Construction professionals are natural problem solvers, and leaders will need to extend grace to allow for this innovation and creativity to flourish without fear of failure. With creative license, you can reimagine certain workflows or responses to challenges you had never considered before.
4. Make Some Temporary Changes Permanent
As companies are eyeing the return to jobsites and offices, employees are beginning to wonder if they can keep some of the work-from-home models that they have created. I firmly believe the answer should be yes.
Construction companies have struggled with productivity and attracting and retaining a strong and diverse workforce for decades. There are a whole host of reasons for that, but one of the biggest issues is directly related to the style in which work is done in construction. Teams often have long hours, as well as intense deadlines under very stressful conditions. The culture has historically led to struggles attracting, retaining, and elevating the next generation of construction professionals—especially women and people of color—due to limited or outdated career paths, reluctance to embrace innovation, and lack of flexibility.
But COVID-19 has demonstrated that creating more flexibility doesn’t necessarily dictate that productivity will go down. When you create more flexibility, you create happier people, and you unlock new styles of working. Collaboration can be maintained or improved as teams take advantage of technology to address problems quickly and get real-time answers. The added benefit is the people factor—you’ll be able to attract and retain a stronger, more interesting, and more diverse workforce by making technology, innovation, and flexibility part and parcel to the culture of your firm.
5. Embrace the Growing Pains
Construction is notoriously risk averse. This often translates into a limited desire to change the status quo by investing in technology or innovation. Projects can last a year or more and operate on razor-thin margins, which contributes to a lack of appetite for trying something new. Instead, the goal becomes to complete a project as fast as possible with as little loss as possible.
As a leader, if you don’t push these changes and embrace the required cultural shifts, it’ll be an opportunity lost. Within the industry, construction leaders have talked about many of these changes for a long time: the importance of technology adoption, the implementation of tools, the exchange of data. In the 2009 UK Constructing Excellence report, Andrew Wolstenholme quoted Winston Churchill’s famous phrase, “Never waste a good crisis.” A key takeaway from this report, more than a decade ago, was that big business-model shifts needed to happen to realize desired outcomes of improved safety, quality, communication, cost, schedule, and productivity in construction.
These concepts are not new, but the time is now. COVID-19 is shining a light on how important it will be to have these pieces in place, not just to thrive as the world emerges from the pandemic but to ensure successful navigation of the next disruptive event on the horizon, whatever it may be.