The construction industry is being challenged with fluctuating consumer behaviors, material procurement challenges, project delays, high-interest rates and inflation. Despite these difficulties, the sector has thrived, with spending reaching $1.8 trillion in the first 11 months of 2023, marking a 6.2% growth compared to 2022.

Deloitte industry experts anticipate a boost in construction for 2024, driven by federal initiatives like the Infrastructure Investment and Jobs Act. The Associated Builders and Contractors (ABC) also maintains optimism, predicting an increase in profitability and staffing levels.

Monitor these top construction trends for 2024 and discover strategies to navigate them successfully.

Construction Industry Nuclear Verdicts & Rising Legal Expenses

The National Law Journal reports a significant increase in nuclear verdicts, with average jury awards tripling from $64 million in 2015 to $214 million in 2019. There was also a 30% increase in $100 million verdicts during the same period.

This surge is attributed to rising litigation funding, desensitization to large verdicts, shifts in the legal environment and changing public sentiment toward businesses. Your business must identify prevention tactics for such outcomes, including:

• Promoting and adhering to high safety standards
• Conducting regular safety education and training
• Properly vetting potential employees
• Offering continuous supervision
• Implementing technology (e.g., telematics, dashcams) to promote safe driving.

Addressing Construction Labor Shortages

According to ABC, the demand for skilled construction workers remains high at 459,000 job openings — the highest level of unfilled construction positions since 2022.

Inexperienced Workers

As labor shortages continue, your construction firm may resort to hiring a larger number of new or inexperienced employees. However, without proper safety education and skills training, these workers may contribute to increased job site accident and injury rates. Along with impacting employee health and wellbeing, these incidents can raise insurance claim frequency and severity, extend project delays and compound operational expenses.

Attraction & Retention Efforts

Steps to combat labor shortages, enhance attraction and retention measures, and build a strong culture of safety include:

• Increasing outreach efforts at community events (e.g., high school job fairs, trade school forums) to encourage the next generation of construction workers.
• Leveraging upskilling and reskilling initiatives to continue educating current workers and build their professional abilities.
• Providing comprehensive and ongoing safety training to new and existing workers of all experience levels
• Offering more competitive wages and benefits
• Attempting to bring employees who recently left the industry back through various incentives (e.g., flexible employment arrangements, career advancement opportunities)
• Exploring underrepresented demographics to increase talent pools.
• Hiring talent recruitment agencies to expand searches and recruit workers with construction-ready skills from closely related sectors such as manufacturing and mining.
• Building and maintaining a positive company culture

Increasing Construction Industry Sustainability Efforts

The construction industry faces increasing pressure to adopt eco-friendly practices due to evolving environmental regulations and consumer preferences. The United Nations Environment Program (UNEP) identifies the construction sector as the largest greenhouse gas emitter, accounting for 37% of emissions. This aligns with global initiatives such as the International Energy Agency’s Net Zero Emissions by 2050 Scenario. Additionally, the U.S. government has emphasized carbon emission reduction through initiatives like the Federal Buy Clean Initiative.

The construction industry is enhancing efficiency and sustainability through various measures. Investments in building energy efficiency totaled $237 billion from 2020 to 2021, as reported by UNEP. Innovations such as mass timber and cross-laminated timber (CLT) are being adopted, with studies suggesting a potential 15%-20% reduction in global carbon dioxide emissions by replacing steel with CLT. Modular construction methods are also reducing waste and improving efficiency. Businesses are exploring additional strategies, including electrifying fleets, using green energy sources (e.g., wind, solar) and going paperless.

Innovative construction methods may face challenges to insure, as underwriters generally look to historical loss data when determining premiums and insurability. However, businesses can weigh these expenses against the cost savings from increased efficiency and reduced waste, along with the reputational benefits of demonstrating a commitment to sustainability.

Construction Sector Technological Advancements

Construction businesses have utilized innovations such as 3D printing, robotics, wearable safety sensors, GPS, drones, dash cameras, self-driving vehicles, telematics and the Internet of Things (IoT) to automate construction tasks, improve efficiency, productivity and safety, and reduce waste and expenses.

Another innovation being utilized is Building Information Modeling (BIM) software to help optimize designs, efficiently manage products, and improve communication, planning and predictability. Its capabilities will be enhanced as 3D printing and virtual/augmented reality technologies continue to improve.

Generative artificial intelligence (AI) also has several construction applications. It can be used to generate optimal plans, design more efficient buildings and enhance risk management programs through automated quality assurance. This technology can also help businesses swiftly respond to client requests and questions.

Despite these benefits, it’s important to note that technology use can also lead to elevated cyber exposure. For instance, PwC’s 2024 Global Digital Trust Insights Survey of 3,800 business and tech leaders from 71 countries found that businesses that had a data breach of more than $1 million increased from 27% to 36% year over year, and the global average cost of a cyberattack was $4.4 million.

Your construction company should leverage technology to review its digital exposures and adjust (e.g., employee education and training, security software) to mitigate possible cyber incidents. Also, consider securing dedicated cyber insurance for essential coverage for potential incidents and related losses.

Download our Construction Cyber Guide for additional information.

We’re Here to Help the Construction Industry Continue to Achieve Operational Success

Several trends are impacting the construction sector. By tracking these developments and mitigating any associated exposures, construction businesses can effectively position themselves to maintain long-term growth and operational success. Connect with a member of our team for additional industry-specific risk management guidance.