March 8, 2018

Silicon Valley and the Construction Industry

Labor shortage is becoming a big problem for the construction industry. Worldwide the construction market is growing and with it also the need for skilled workforce. Some interesting statistics can be found in an article about workforce shortage from Because construction is a big endeavor (a house is one of the most costly and big things a person can buy) and is also non-movable. There are few feasible ways to outsource the production any infrastructure project.

Pre-fabrication may help with the situation, but there are limits to how far a house can be transported efficiently. Therefore, it's almost impossible to achieve the efficiency that the manufacturing industry has with their economy of scale. On top of that is also the growing pressure from the client side to get increasingly shorter building times and fixed prices (how high the price is, is not as important as to have a guarantee it won't change during construction).

Obviously the opportunities that arise from this situation are going to be used by developing new construction products and services. What is interesting is that in some regions, the client is taking the role of the product developer. See for example this article of how Google and Facebook becomer real estate developers from the German portal handelsblatt. As a future client and user of infrastructure and buildings I'm thrilled that the industry is being pushed to create better things. As a peer professional in the AEC industry, I'm worried about small businesses (about 80% of companies in the AEC Industry) not being able to position themselves accordingly and die slowly or survive with very low margins. Managers and leaders are responsible of preventing this situation by redesigning their business model and adding value to their services.

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