Tackling the top 3 challenges in 2024's construction industry .
Like any other, the construction industry faces its fair share of challenges. At best, the path into 2024 and beyond appears turbulent. At worst, we’re looking at a perfect storm. 66% of the building companies in Europe predict that 2024 will be a very challenging year. Making it worthwhile to break down these challenges and explore how construction, renovation and manufacturing companies can come out on top.
Challenge 1. Building and renovating slows down
Although many orders are up to standard, we see alarming signals in the building market that are proof that the industry is slowing down.
Firstoff: the industry is grappling with soaring material costs, which have skyrocketed by a staggering 20%. The pandemic and Ukraine war increased the price of many building materials. Some materials became a little cheaper this year. Although it is more correct to speak of price stabilization. If you believe prices will fall even further, you will be disappointed.
Furthermore: high interest rates are making potential homeowners think twice about taking the leap into property ownership or renovating. In the past quarter, 30 percent fewer home loans were granted. The number of applications is at the lowest level in ten years. In the period July-September, approximately 43,500 home loan agreements were concluded in our country for a total amount of 7.2 billion euros, according to figures from the BVK. That is about 30 percent less than in the third quarter of last year.
This combination of high expenses and financial uncertainty has put a damper on the desire to build or renovate.
Challenge 2. Anticipating EU ambitions
Beyond the potentially ‘problematic’ 2024, the construction industry needs to prepare for Europe’s ambitions for 2030 and 2050.
The sector makes a big contribution to environmental degradation. Buildings are responsible for 32% of global energy consumption. The Inter-Governmental Panel on Climate Change (IPCC) state that to restrict global temperature increase to 1.5C, building emissions need to be to be reduced by 80–90%.
At the same time, homeowners are encouraged to drastically improve the EPC value of their homes. That means a colossal wave of renovation projects is fast approaching. Making now the time for all construction, building and manufacturing companies to prepare, strategize, and innovate in order to be ready for the opportunities this wave will bring.
Challenge 3. Huge workloads & the need for innovation
The scale of work required to address these challenges is massive, necessitating the industry to transition from a push- to a pull strategy. Digitization plays a crucial role in this shift. Embracing the right digital tools and installer solutions is inevitable. In addition, eco-driven solutions will prove to be essential. Developing sustainable calculators that provide insights into Energy Performance Certificate (EPC) values, aligns seamlessly with the growing emphasis on green and eco-conscious construction.
Okay, so, now what?
1. Embrace Digital Transformation
Many building companies struggle with inefficiencies due to low digital maturity, especially in areas like communication, planning, and sales. Embracing digital solutions reduces errors, enhances communication and coordination, optimizes project planning, and improves overall project quality. Prioritizing digital transformation and investing in the right tools and platforms allows companies to stay ahead in a competitive digital landscape, deliver better outcomes for clients, enhance collaboration, and future-proof their business.
By implementing centralized platforms, companies can improve efficiency by up to 17%.
Invest in advanced digital tools and installer solutions, taking inspiration from successful cases like Renson. This step enhances operational efficiency and ensures you stay at the forefront of the industry.
Sales platforms that bring together product simulators with order requests thus bypassing the distribution black box, making it possible as a producer to (re)connect with all relevant stakeholders. We developed a platform for Cedral aimed at both end-customers/home owners and contractors/installers.
Eco-Driven Solutions: Develop sustainable calculators that provide valuable insights into Energy Performance Certificates (EPC) values. This sustainable approach aligns with both environmental goals and the demands of the modern market.
BIM: building your building digitally first: The use of BIM (Building Information Modelling) is playing an increasing role in construction. BIM is a digital model in which all information about a construction project is stored, including designs, construction drawings and other relevant data. Using BIM ensures better cooperation between all construction partners involved and contributes to a more efficient construction process.
2. Create Compelling Business Cases that proof the ROI of your opportunity
Let's imagine that your construction business currently spends hundreds of extra man-hours correcting manufacturing faults without any way to identify and address these issues before work begins. In this scenario, having a system in place to capture those faults early on could result in significant cost savings and substantial financial benefits for future projects.
This realization opens up the path to developing a specialized app, shifting the focus from whether to create one to determining its features and how quickly it can be implemented.
3. Unlock new revenue streams through circularity.
Improving circularity in construction will be necessary to reduce the sector’s emissions and materials footprint. One way to reduce the demand for materials is to ensure the best use of end-of-life materials—that is, material that can be reused or recycled when buildings are renovated or deconstructed. Because these materials are scarce (particularly in Europe, where buildings have long lives), the sector is also developing innovative new materials and working to secure access to recycled materials from other sectors.
For Vanderweghe we created a new revenue stream by transforming high quality marble waste into 12% EBIT
4. Seek out a strategic partner capable of guiding you.
Seek out a strategic partner capable of guiding you through these turbulent waters. This partner should have strong expertise in the complexities of the industry, enable risk-free innovation, align projects with user needs, secure business support, and ensure technical feasibility. Demanding? Absolutely and rightly so. After all: the future of your company is on the line.
If you're in need of further details, facing challenges, or searching for innovative insights in the manufacturing industry, don't hesitate to get in touch. Our specialists in concept innovation strategy, product design, digital experiences, development and go-to-market are at your disposal to offer their support.
