Construction Industry Faces Massive $2.5 Trillion Loss due to Uncertainty in 2025
Construction Industry Faces Massive $2.5 Trillion Loss due to Uncertainty in 2025
As 2025 approaches, the global construction industry is bracing for a staggering potential loss of $2.5 trillion, a figure that surpasses the GDP of Italy. This alarming estimate highlights the significant impact of ongoing uncertainties affecting the sector. New research from Currie Brown, a leading provider of project and cost management services, sheds light on the challenges that lie ahead.
In their latest report titled "Building Certainty in an Era of Relentless Change," the firm surveyed over 1,000 decision-makers worldwide, responsible for managing construction pipelines averaging $12.9 billion. The findings indicate that, on average, organizations are already experiencing financial losses equivalent to 13.7% of their current pipelines due to prevailing uncertainties, equating to a staggering $2.1 billion for each company.
One troubling aspect of the situation is that nearly one-third of construction projects have been either postponed, scaled back, or canceled altogether. Alarmingly, only 20% of industry leaders expressed confidence in their ability to adhere to budgetary constraints amidst these turbulent times.
The main factors contributing to this bleak outlook include:
- - Material Cost Inflation: Rising prices for essential construction materials are putting strain on budgets.
- - Energy Price Volatility: Unpredictable energy costs complicate project planning and execution.
- - Supply Chain Disruptions: Ongoing global supply chain issues hinder the timely availability of necessary materials and labor.
- - Labor Shortages: The industry struggles with a shortage of skilled workers, further exacerbating delays and project cancellations.
Dr. Alan Manuel, Group Chief Executive Officer of Currie Brown, emphasizes the necessity of acknowledging these persistent uncertainties as the new normal in the construction landscape. According to him, external influences such as escalating costs and political shifts are major drivers of this instability. However, he also points out systemic issues such as outdated procurement processes, misaligned objectives, and incomplete designs that continue to permeate risk into the industry.
Manuel calls for immediate action to tackle these challenges, stating, "We must address these challenges or the disruption will escalate. And that's not acceptable. Construction underpins economies and improves lives. This industry is too important to fall behind."
In response to the uncertainties facing the construction sector, Currie Brown has introduced the Construction Certainty Index. This tool tracks forward-looking confidence and assesses the impact of various risks on global projects. It aims to provide organizations with insight into their current standing and guide them on where to focus their efforts for improvement.
While the report acknowledges that there is no single solution to these complex challenges, it identifies four interconnected areas for organizations to bolster their resilience:
1. Technology: Companies should embrace technology with a strategic mindset, rather than merely as a quick solution.
2. Data: Priority should be given to collecting quality insights rather than just accumulating large volumes of data.
3. People: Building long-term partnerships and anticipating skill needs early in the process can help mitigate risks.
4. Mindset: Organizations must remain agile, adaptable, and proactive in their approach to risk management.
The report also issues a clarion call for collective action, asserting that the industry cannot resolve these systemic uncertainties independently. Collaboration between governments, asset owners, and delivery partners is essential to institute meaningful change and ensure the continued growth and sustainability of the construction sector.
The construction industry stands at a critical juncture as it navigates through these headwinds. Stakeholders are urged to come together, address the risks at hand, and embrace the changes necessary to safeguard the future of construction.
For more in-depth information, refer to the full report, "Building Certainty in an Era of Relentless Change."
About Currie Brown
Currie Brown is a globally recognized leader in project management, cost management, and advisory services, dedicated to helping clients navigate their projects with accuracy and confidence across various sectors.
Topics General Business）
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