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Predictions Galore: Addressing Risks

If we look to the past few years, we know a few things about the construction industry: labor is scarce, the supply chain is weak, cyber risk is real, and there is much economic uncertainty that leads to much risk for construction. If we look to the future, will the same be true? We are currently in the midst of a blog series looking at predictions for the construction industry. Today, let’s turn our attention to risk and its relationship to technology, and let’s see what the future holds.

A new report from Dodge Construction Network shows data access will be key to addressing many of the top risks including not being able to find qualified employees, supply chain challenges, and addressing cyberattacks. How do we address these risks? It all starts with data resilience.

Before we get into the hard numbers illustrated here, it is important to note the report defines data resilience as the ability to access all project and business documents to support work at any time, from anywhere, and on any device. We find here that only 39% of architects, engineers, and contractors currently have this level of access at least 90% of the time.

Some reasons for this include the inability to access devices on mobile devices, software limitations, and lack of timely access to documents. Naturally, as we all know this leads to unplanned rework, schedule delays, cost overruns, and construction errors. If companies can have better data resilience, then they can also improve project performance. Now, let’s dig into each risk a little bit deeper.

Market Risks

The overall market has posed significant risks for construction companies, creating a level of uncertainty. This report shows all respondents are struggling with addressing market risks and that most of the strategies to manage market risks are considered at least moderately effective.

Some of the strategies include hiring individuals with experience in new markets, which addresses the lack of project diversification and the inability to adapt to changes in the marketplace. Another is to conduct research to identify growth markets and to explore mergers, acquisitions, and joint ventures. Finally, we see another strategy is to upskill current resources to qualify for work in new markets.

Workforce and Resource Risks

We all know the labor and material shortage is hindering construction businesses. When it comes to finding skilled labor, contractors most frequently report high or very high difficulty, at 55%, and 49% of architects agree. Engineers are slightly lower, but a whopping 84% report this challenge at a moderate or higher level, which shows it is still a concern, if only a moderate one.

Some strategies for attracting skilled employees include offering competitive salaries and benefits, partnering with colleges and universities, investing in technology to support flexible working arrangements, showcasing use of technology to attract employees, and partnering with technical high schools.

As we know, attracting and retaining workers are two very different things—although according to this report retaining employees is less of a challenge than recruitment, but it is still at least moderately difficult for some.

Some strategies for retaining skilled employees include offering flexible work arrangements and hybrid policies, creating a positive work environment, investing in employee development, providing a clear advancement path, providing more comprehensive benefits packages, conducting employee satisfaction surveys, offering training, and investing in workforce management technology.

Supply Chain Risks

When it comes to the supply chain, roughly half of respondents say finding alternative sources for materials is a good means of mitigating supply chain risks—and it is one of the most effective of all the options offered.

Some other approaches include increasing the amount of inventory, tracking location of materials during delivery, and raising prices to cover possible problems, just to name a few. Certainly, having access to realtime data could provide a better glimpse into what is working in the supply chain and what is not, which ultimately leads to better decisions being made.

Cyber Risks

We know cybersecurity is a huge threat for nearly every company in nearly every industry around the world. In fact, 59% report a cybersecurity incident in the last two years and only 72% believe they have a medium or higher level of preparedness. Data resilience means having access to information, but also being able to withstand these cybersecurity threats in order to not lose access for days at a time.

This report also suggests very few of the respondents who are most concerned about cybersecurity pursue security compliance certificates. However, 62% of those that do think it is a highly effective way to manage these risks. The second highest rating of a risk mitigation strategy is at 60%, which is to consider improving internal security procedures.

Technology Risks

Certainly, even technology itself creates risks for construction businesses. Some approaches for addressing technology risk are to use cloud-based collaboration solutions, replace existing technology to improve compatibility with stakeholder requirements, and to foster a culture of innovative using of technology.

What would you add? What other risks do you face? How do you plan to address them in the year ahead? As we prepare for 2024 and the technologies we will embrace in the year ahead, we first must address the risks and needs in our business. The is always where we must start. In the weeks ahead, we will dig into some predictions in order to better plan for the year ahead.

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