The State of the Canadian Construction Industry: Is Productivity in Decline?
The construction industry has faced challenges in productivity for years – but CAD solutions may change the game in 2017.
Toronto, ON – January 30th 2017 – Between the booming Canadian housing market, technological revolutions in equipment, and an ever-changing economic climate, the construction industry is dealing with more challenges than ever before.
BluEnt has taken to the latest industry research to find out what lies ahead for the upcoming year.
The Economic Outlook
Canada’s construction industry has been on rocky ground. A report by Timetric found that its output value dropped from US$294.1 billion in 2014 to US$289 billion in 2015, due to macroeconomic factors such as a high unemployment rate and low commodity prices.
But Timetric’s Construction Intelligence Center (CIC) revealed good news as well. It projects that the Canadian construction industry will reach US$321.1 billion by 2020 by a compound annual growth rate of 2.31% per year.
This is thanks to substantial investments in energy infrastructure, commercial projects and government programs including the New Building Canada Plan (NBCP) and the Affordable Housing Initiative (AHI).
“Growing population and urbanization, and improvements in domestic manufacturing activities will likely be the main drivers behind the industry growth up until 2020. In addition, the government’s efforts to enhance the residential and public infrastructure will also contribute to the growth,” predicted Timetric’s lead economist in a press release. “For example, to provide affordable housing to the lower- and middle-class population, the Canadian government is planning to spend US$6 billion in social infrastructure by 2020, which includes expenditure on renovation and new housing buildings construction.”
Is Productivity in Decline?
Mark Zandi, chief economist at Moody’s Analytics, stated in a recent Fortune magazine article that “Businesses’ biggest problem in 2017 won’t be weak sales, soft pricing, or even too much regulation… [Their biggest problem] for the foreseeable future will be a lack of qualified labor.”
But this isn’t the only obstacle cited by industry experts. The 2016 NBS International BIM Report showed that the top construction industry challenges according to respondents were related to completing projects on time and within their budget.
Cited reasons for this included inefficient project planning, lack of contractor experience, delayed delivery of materials, and improper site management.
As a result, an increasing number of construction companies are turning to labour-saving equipment such as construction drones, robots, and CAD technology to fill the gap. Specifically, Canadian respondents in the NBS report reported an increased use of Building Information Modeling in the past year, from 64% to 67%. (Read more about the growth of BIM here.)
Areas of Demand Growth
According to the Financial Post, office construction will be settling in 2017 to allow demand to catch up with the abundant new supply. A recent article stated that 6.5 million square feet of office space was completed in 2016, with another 14 million square feet under construction at the year end. Accordingly, the national vacancy rate rose to 12.5% – though this is still lower compared to the North American average.
As for the red-hot Canadian housing market, construction professionals can expect stable but significant development. “We don’t have excessive demand, because units are being absorbed. We have a lack of supply problem and that won’t be addressed by rate changes or mortgage regulations,” stated Will Dunning, chief economist at Mortgage Professionals Canada, in an interview with Moneysense.
Timetric’s report forecasts residential construction to dominate the construction industry in Canada over the next four years, reaching an estimated 38.4% of total industry value in 2020. This will cater to rising urbanization, population growth, and economic growth. (Read more about what to expect from the Canadian housing market here.)
BluEntCAD is a leading provider of CAD solutions in Canada. From our studio in Toronto, we offer a complete range of drafting and drawing services for architects, builders and contractors.
We follow the latest trends in cutting-edge technology to draft, detail and deliver construction documentation sets with international standards of quality.
Though BluEntCAD is experienced in construction drawing sets for both residential and commercial projects, we will prepare to focus on outsourcing CAD solutions for residential construction going into the new year.
In line with our past work, we will incorporate feedback from clients through all stages of the documentation process to create a product that meets the needs of construction companies today.
Strategic Sourcing & Business Development Manager