STRATEGIC PARTNERS
CONSTRUCTION FIRMS TURN TO TECHNOLOGY TO COMBAT RISING COSTS AND SUPPLY ISSUES
DLA Piper , a strategic partner of Wirral Chamber , has launched a new report – Constructing the Future : Surviving and thriving in the era of disruption . Key findings include :
• More than four in five ( 85 %) European construction executives expect price rises for materials in coming months .
• European construction executives are leading the way in investing in technology to offset inflation . Almost half of them expect investment in digital technology to increase substantially in the next two years .
• Contractors are responding to the immediate challenges of price volatility for materials , commodities , labour and energy by prioritising projects with flexible pricing arrangements .
• Energy inflation is the most significant challenge for construction executives in Europe .
As the construction industry seeks new opportunities to combat inflationary and geopolitical pressures , costs remain an immediate concern on every project . More than four in five ( 85 %) of construction executives in Europe expect the price of materials to rise over the next 18 months , according to a new report from global law firm DLA Piper , Constructing the Future : Striving and thriving in the era of disruption . The report surveyed senior construction executives across Europe , Asia Pacific and the Middle East . It reveals that the industry , particularly in Europe , is deploying technology to offset inflationary pressures and supply issues . Almost four in five ( 79 %) construction executives in Europe have deployed AI technology to automate orders , payments , invoicing , and delivery tracking .
According to DLA Piper ’ s research , construction executives in Europe are more likely to invest in technology than their counterparts in Asia Pacific and the Middle East . 47 % of executives in Europe expect their investment in digital technology to increase substantially over the next two years , compared with 21 % of executives in Asia Pacific and 12 % in the Middle East . Construction executives in Europe also lead other regions on the adoption of new forms of technology , such as the Internet of Things . More than four in five ( 85 %) executives in Europe have incorporated AI , robotics , and analytics software into project design processes , compared to 64 % in Asia Pacific and just 45 % in the Middle East .
invasion of Ukraine have all created headwinds – particularly in Europe . Investment in technology is not a complete solution to the challenges facing the construction industry . But many executives are putting capital into technology to help manage , and streamline , complex procurement and supply chains . Technology is also providing more of the tools needed to meet sustainability commitments and capitalise on market opportunities . Internet of Things applications , AI technology and analytics all aid in navigating logistics , easing cost pressures and ensure ESG compliance .”
DLA Piper also found that inflation is rapidly changing construction executives ’ attitudes to contract price risks . Over half ( 54 %) of construction executives say securing non-fixed price contracts is now one of their top priorities in the coming months . Executives in Europe expect volatility to continue , with 56 % identifying energy price inflation as a significant challenge to their investment strategy . Other challenges include geopolitical risks ( 51 %), macroeconomic uncertainty ( 36 %), and the tight labour market ( 33 %), contributed to by COVID-19 and Brexit .
Alongside inflation , the transition to sustainable construction is a major challenge , particularly for executives in Europe . More than four in five ( 82 %) say they are committed to reducing their carbon footprint across their operations and supply chains . Despite the strength of this commitment , just 32 % in Europe consider their own organisation to be well prepared to reach Net Zero by 2050 . Confidence is even lower in other regions : 18 % of executives in Asia Pacific and 9 % in the Middle East feel well prepared to achieve Net Zero in this timeframe .
Paul Giles , partner at DLA Piper , said : “ This report illustrates the range of pressures being felt worldwide , including environmental impact and carbon reduction . The construction industry understands the role it can play tackling climate change . In Europe , the overwhelming majority of executives are committed to decarbonisation . But supply chain disruptions and rapid price inflation have created additional cost-pressures for executives already managing the additional cost of transitioning to Net Zero . At a time when executives are focused on maintaining competitiveness , industry-wide sustainability standards would encourage best practice longer term .”
Richard Edwards , partner at DLA Piper , said : “ The past two years have been challenging for the construction industry . Pandemic restrictions , volatile commodity prices and the Russian
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