Housing builders and developers are scrambling to find more efficient ways to accelerate supply. This article from McKinsey notes that the construction industry as a whole is moving through the same transformation and will face some major changes in the next five to ten years.
The construction industry, and its broader ecosystem, erects buildings, infrastructure, and industrial structures that are the foundation of our economies and are essential to our daily lives. It has successfully delivered ever more challenging projects, from undersea tunnels to skyscrapers. However, the industry also has performed unsatisfactorily in many regards for an extended period of time. The COVID-19 pandemic may be yet another crisis that wreaks havoc on an industry that tends to be particularly vulnerable to economic cycles.
External market factors, combined with fragmented and complex industry dynamics and an overall aversion to risk, have made change both difficult and slow. The COVID-19 crisis looks set to dramatically accelerate the ecosystem’s disruption that started well before the crisis. In such times, it is more important than ever for actors to find a guiding star for what the next normal will look like in the aftermath and make the bold, strategic decisions to emerge as a winner.
Many studies have examined individual trends such as modular construction and sustainability. This report provides an assessment of how the full array of disruptive trends will combine to reshape the industry in earnest. Our research builds future scenarios based on more than 100 conversations with experts and executives, firsthand experience serving clients throughout the ecosystem, and reviews of other industries and their transformation journeys. We confirmed the trends and scenarios that surfaced by conducting a survey of 400 global industry leaders. Finally, we quantitatively modeled value and profit pools across the value chain, based on company data today, and formulated future scenarios. We found overwhelming evidence that disruption will touch all parts of the industry and that it has already begun at scale.
Among our findings are the following:
Construction is the biggest industry in the world, and yet, even outside of crises, it is not performing well. The ecosystem represents 13 percent of global GDP, but construction has seen a meager productivity growth of 1 percent annually for the past two decades.Read More