Leveraging Existing Technology to Tackle the Industry’s Biggest Challenges: Procore Leaders Cast Predictions for 2024
In the past twelve months, the construction industry has experienced significant transformation in response to dynamic challenges and the continual emergence of new technologies. With 2024 just around the corner, construction spending in the United States has already surpassed $1.6 trillion in the first 10 months of the year, marking a 5.6% increase compared to the same period in 2022.
To gain a better understanding of what’s at play, we spoke with a number of Procore executives to get their take on everything from evolving market dynamics and global labor scarcity to emerging trends in workforce development, contemporary payment methods, and burgeoning technological advancements – all within the construction industry.
Below is a summary of our top 10 construction predictions for 2024:
1. The Industry Better Leverages Generative AI to Standardize Data
Today, teams are burdened to get the project done on time and within budget - while still keeping safety and quality requirements in mind. Generative AI will be leveraged by more construction businesses to help collect and standardize the vast amounts of data they operate with – providing more actionable insights and reducing risk.
“With Generative AI, companies will be able to better structure and standardize their data across the entire lifespan of a project,” said Rajitha Chaparala, vice president of Product, Data & AI. “We are already beginning to see general contractors leverage this data in unique ways to improve their business. It’s really exciting to see.”
2. Taking Note of Construction’s Labor Shortage Ripple Effects
While there has been some improvement over the last few years, many industries continue to struggle to recruit new talent to support the increasing demands of their customers. In 2024, businesses will double down on new forms of recruitment, such as positioning themselves as a technology-first company, to attract younger talent who grew up as digital natives.
With an aging workforce, construction companies will also implement new skills training and workforce development programs for their current employees, especially when it comes to leadership development and Diversity, Equity, Inclusion, Belonging (DEIB) initiatives.
“The labor shortage is not just construction’s problem; it’s everyone’s problem. It’s stopping us from being able to effectively future-proof our infrastructure for population growth and climate change, let alone repair the aging infrastructure we have today,” said Tooey Courtemanche, Procore Founder and CEO. “This means that our future energy security, home buying power, ability to commute safely to work, and more, hinge upon getting more people into construction. We should all be invested in attracting more people to construction because it will benefit us all.”
3. Increased Sustainability Regulation Leads to More Formalized ESG Programs
Environmental, Social, and Governance (ESG) is now top of mind for every business, especially construction which continues to have a large carbon footprint. As we head into next year, we expect there will be a move to a more universal or standardized method of carbon reporting in the built environment. For example, California recently passed legislation requiring companies over $1B to report their emissions by January 1, 2025. More states are likely to follow with similar requirements.
“Many construction companies now routinely report on their ESG efforts and they typically appoint a vice president or executive to oversee this important area of the business,” said Sandra Benson, vice president of Industry Strategy. “Not having an ESG program in place could potentially disqualify a company from consideration for a project. In the future, the inability to meet ESG requirements may even prevent companies from submitting bids altogether.”
4. Using Data-Driven Insights to Enhance Risk Management
Last year, as much as $40 billion was wasted in the construction industry due to inefficiencies and poor productivity. Construction companies are looking for a platform that can connect their construction data, structure that data, and then glean insights to help reduce risks on future projects. Groundbreaking solutions like Procore Risk Advisors are already rewarding companies that see the value in risk management by using data-driven insights to unlock better insurance terms.
“It all comes back to predictability. The more we can use data to help construction professionals predict things like project delays, material needs, equipment, and weather conditions, the better off they’ll be,” said Sarah Hodges, chief marketing officer. “My hope is that we will ultimately help them avoid those kinds of situations altogether.”
5. Empowering New & Existing Workforces via Tech
People are walking off the jobsite and not returning in numbers we’ve never seen before. Advancements in technology, particularly in AI and machine learning, are poised to create new jobs and better leverage the current labor pool in more intelligent ways. We will also see solutions such as VR/AR and robotics become more mainstream to supplement the dwindling and aging workforce.
“With some types of the work drying up, we are starting to see customers differentiate themselves and invest in technologies that will make them more efficient and mitigate risk while margins are getting tighter,” said Kris Lengieza, vice president of Global Partnerships & Alliances. “AI is a great example of this, where individuals can be more productive on the jobsite with the valuable insights that can be provided from this solution. I’m confident that 50% of our time can be saved from the technology that comes out in the next year or so.”
6. Infrastructure Spending Takes Shape
Earlier this year, Procore surveyed civil and infrastructure firms and found 79% said they expect their project backlogs to increase or remain the same over the next 12 months as new federal infrastructure funding ramps up. To achieve these massive undertakings, firms will have to find innovative solutions, improve self-performance, and leverage clean data to build more efficiently.
“Although the Infrastructure Investment and Jobs Act passed in 2021, progress has been slow because of strict requirements and contracts,” said Benson. “The money is now finally starting to be distributed but companies are struggling to staff these projects. As we move into 2024, companies will require a collaborative platform to tackle their extensive backlogs.”
7. Mental Health Awareness Takes Center Stage
The construction industry grapples with elevated rates of suicide, substance abuse, and addiction. Significant progress has been made over the past few years; however, there is still more work to be done. Initiatives like the Get Construction Talking campaign, introduced by Procore and The B1M, aim to inspire businesses to convert conversations into action. Thus far, Get Construction Talking has raised over $80,000 for the cause.
“Within the construction industry, we will see conversations around mental health continue to expand and gain momentum,” said Sasha Reed, senior director of Industry Transformation. “As those conversations evolve and businesses invest in more resources to support their people, there will be an influx of holistic safety programs. This will ultimately translate to a total cultural transformation.”
8. Short-Term Challenges Associated with Data Standardization Continue
Because each project is so unique, customization is often required within the construction industry. The downside of that approach is that much of the data that exists is not standardized. While technology like generative AI is helping, we’re still a few years away from mainstream data standardization within the construction industry.
“About a third of our customers are in a good place in terms of standardizing their data and integrating it throughout their systems,” said Chaparala. “Another third of our customer base has started, and we have to encourage them to stay on that path by giving them tangible examples of ROI. And then I think the last third have yet to embark on this journey.”
9. Construction Prioritizes Retaining Women
Construction has a leaky bucket. Although strides have been made to attract women to the construction industry, retention remains a challenge. To help improve gender diversity and foster a greater sense of belonging within the construction industry, businesses are now focusing on creating improved career paths and are increasingly hiring returning mothers as part-time employees.
“In 2024 and 2025, expect more meaningful workplace policies that allow people to bring their best selves to work within a timeframe that allows them to balance their lives better,” said Reed.
10. Making Strides Towards Frictionless Payments
Historically, the payment process between general contractors and specialty contractors has been highly complex, with pencil requisitions, retainage, lien waivers, and other compliance documents all required before a single dollar can move. As general contractors digitize administrative processes and improve cost controls, expect a shift away from paper checks toward digital disbursements of payment.
“Tools like Procore Pay will help specialty contractors get paid faster by streamlining the payment application experience and automating the lien waiver exchange,” said Hodges. “In the future, we're excited about the prospect of further reducing payment times for specialty contractors across the United States through innovative advancements including the ability to administer an early pay program using Procore."
