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AEC and Pandemic: Response and Impact - March 2021 Update

On the left: Cleaners: a new crew on construction site (Source: iStock). On the right: An Example of physical distancing measures at Dolores Park, San Francisco (Courtesy of Natasa Mrazovic)

Research initiative

This series of monthly reports is meant to help the AEC practitioners understand the COVID-19 impact on the industry with identified short- and long-term trends. Equally the reports provide the information about the industry’s response from month to month in form of a systematization and analysis of observed challenges and solutions specific organizations offer and/or have adopted. The systematized references listed in the last section allow a deeper dive into specific topics.

Categorization of the observed issues &  Trend analysis

In March 2021 the pandemic continues to be the most important discussion topic in the AEC industry, while the discussions about sustainability and climate change are following closely. Due to progressive vaccine rollout, we are finally at the start of the pandemic’s end. The intensity of the pandemic’s impact on the industry continues to be correlated with the health emergency and economic recession in a specific region. Overall, the AEC industry is in a recovery trajectory and optimistic about the future, although challenges remain. Statistics such as construction jobs, billings, profit, margin and sales expectations are substantially above any measurements over the past year. A bleak 2021 outlook from December started to change, although it is “just a start” according to the experts.

The volume of COVID-19 related publications seems to have further “watered-down” since December with substantially less webinars and publications discussing the pandemic only. The communication returned to pre-pandemic levels and topics already in December and the AEC community is discussing its usual topics such as pandemic induced supply chain issues, reopenings, hybrid workspace re-entry, construction projects going forward, infrastructure investments, labor shortage and vaccination of employees. Pandemic fatigue is slowly replaced by optimism, and the vaccinated are slowly returning to their pre-pandemic activities. The March trend analysis is based on 783 selected references (out of 801 analyzed publications). The categorization of the observed issues in March remained the same as in the previous months, including 12 categories and 22 subcategories.

March 2021 Trend Chart

Read more: Detailed trend analysis and monthly highlights

The highlights of each category observed in the latest published month (March) are provided in the blocks below. More information about a specific category from the latest and previous months can be found in the downloaded report(s) - the links are provided below.

0. Global socio-economic, geo-political developments affecting AEC

  • Globally, the focus is on China – US – EU tariffs for trade given the new US government actions; blockage of the Suez Canal further delaying global supply chains;   the US- Russia cold relationship, Myanmar protests, Hong Kong elections, Saudi Arabia investing in hydrogen market; & cyberattack on Microsoft blamed on China.
  • Countries are assessing the damage to economic growth wrought in 2020 by lockdowns. Only China had positive economic growth in 2020. Global GDP is expected to grow by 5.6% in 2021, and continue the recovery with 4% growth in 2022.
  • COVID-19 pandemic has slowed progress of achieving the UN's Sustainable Development Goals by 2030. Rich countries stampede for vaccines over poor countries

1. (Advance) planning: short- & long-term strategies

  • Strategic planning remains among the 3 most discussed topics in March ‘21, mostly due to a higher interest in leadership & self-improvement strategies; & reignited reopening plans.
  • 80% of executives believe their organizations have responded effectively to the pandemic; some firms have proven to be more resilient than others.
  • Business-model innovation was the most important strategic lever in addressing the crisis, and these innovations will persist beyond the crisis. New normal requires building a new culture.
  • Beyond the COVID-19 pandemic, certain measures to curb the growth of greenhouse-gas emissions will be central to global economic recovery.

2. Open communication and collaboration

  • March communication volume and openness is on pre-pandemic levels (as in December). The number of Open communication and collaboration mentions continues to decline.
  • The industry’s operations returned to pre-pandemic business-as-usual. Practitioners are cautious and protective of their businesses, due to continuous challenges, such as supply chain delays, high cost of raw material and labor shortage, issues with contracting and potential litigations.
  • AEC companies are launching initiatives to educate and promote collaboration.

3. Procedures of shifting workflows

  • This category had again the highest interest with 35.8% representation in the selected references; due to continuous challenges contractors are facing and workflow shifts.
  • The March challenges include worker H&S, project shutdowns and delays, fewer projects, less availability of products, labor shortage increase, supply chain delays, material shortage & cost fluctuations.
  • On the other hand, the industry is finally in positive trajectory; the statistical indicators of future construction spending (e.g., ABI) show positive trend first time since the pandemic began, contractors’ revenue expectations and backlogs are on the rise with reports of delayed projects restarting. Construction bidding activity is 36% up from pre-pandemic levels.
  • The number of supply chain and workspace re-entry discussions increased from December.

4. Health and Safety (of all, including employees)

  • H&S has been discussed 11% more in March than in December mostly due to vaccine rollouts & new virus variants.
  • Experts predict progress toward normalcy during the second quarter of 2021 in the UK and the US and herd immunity in the third quarter. New variants & other risks threaten that timeline. China is expected to reach heard immunity in the third quarter of 2022. Many low-income countries may not receive enough doses to vaccinate all adults until well into 2022.
  • Vaccine rollout has brought optimism and vaccinated are slowly returning to some pre-pandemic activities. Nevertheless, mental health crisis remains.
  • Health and wellness of employees will remain a priority in the post-pandemic workplace.

5. Management of employees (in crisis)

  • The volume of discussions about this category increased 89% in March in comparison to December given the increased focus on workspace re-entry strategies.
  • The best practices and innovative solutions to accommodate employees’ needs in the post-pandemic workplace are discussed. Each of the three major workplace types (WFH, hybrid solutions and full workplace re-entry in person) have different methods for boosting employee engagement and productivity while taking care of employees’ health and wellbeing.
  • Companies are starting to understand the impact of employees health on companies' performances. Psychological safety is important for not only individuals but also team performance. Reskilling will be essential in the future to meet new needs.

6. Adoption of (new) technologies

  • Interest in this category has slightly dropped in March due to a higher interest in workflows shifts happening now at the start of the pandemic’s end. Nevertheless, digitalization and automation continue to be the most important strategies during the pandemic and in the next normal.
  • Pandemic has accelerated contech adoption threefold. In 2020 funding for construction-related technology startups hit $1.3B, a 56% YoY increase from 2019.
  • In March, Cybersecurity / Privacy is experiencing interest increase due to countless news of cyberattacks and ransomware.

7. Buildings & cities for a next normal

  • The interest in this category increased 44% from the December given the industry’s positive optimistic recovery trends, more (new) building projects, restarts of the projects, higher backlogs & billings. Pandemic-specific articles dropped to a minimum given that we are at the end of the pandemic.
  • Residential market is roaring in the US. Office, travel, hospitality, & entertainment construction have dropped precipitously; industrial buildings are booming. Governments are investing in infrastructure projects.
  • Interest in education increased 300% since December due to school reopenings & learning issues during the pandemic.
  • Design trends focus on health, comfort & wellbeing, biophilia, sustainability, green, equal and inclusive, & revitalized future cities, world’s first space hotel (to open in 2027), digitalization & smart building technologies.

8. Silver lining

  • Optimism about reopening and returning to pre-pandemic normal diminished the need to talk about silver lining.
  • The industry has been taking successfully this crisis as business opportunity. Service providers in digital tech continue to lead the effort.
  • Besides digitalization & the visibility of the scale & effort to address climate change, this crisis has brought a chance for large companies to hit “reset” and prioritize the environment, the community, customers & employees, opened the way for the 4th Industrial Revolution, entrepreneurship boom, & the interconnectedness of business & society.

9. Future predictions

  • The community is optimistic about the future due to progressive vaccine rollout & busy with challenges.
  • Accelerated digital transformation is changing the AEC industry. The bulk of short- and long-term pandemic-driven construction industry issues has been or will be solved with tech. Futuristic building concepts are emerging.
  • When the economy settles into its next normal the industries are expected to return to somewhere around their previous relative positions. The dynamics within sectors are likely to change. Entrepreneurship boom is expected in the next 3 years.
  • Dispersion trends will continue: workspaces are changing residential & office RE & cities, higher education is partially going online, & healthtech and crypto will boom.

10. Official Strategies / Guidelines // Rules / Regulations

  • March brings 60% more discussions about this topic due to updates of existing regulatory mechanisms and guidelines. We can see the pandemic’s end and, retrospectively, conclude that the community managed to survive without legally obligatory standards.
  • Developing regulatory mechanisms to address climate change are crucial for our survival. Companies' commitments to reduce emissions, end deforestation, reduce waste & other environmentally friendly actions have been popping up across supply chain policies.
  • Quick adoption of AI is bringing debate surrounding ethics, governance and regulations. Global cybersecurity & privacy standards are discussed.

11. Building operations

  • Building operations continue to play crucial role in strategies to return occupants safely in workspaces & creating healthier buildings.
  • Alternative HVAC solutions for using less energy will remain important discussion topics in the future as sustainable green buildings are again becoming a “hot” topic, given that listed companies are now subject to Environmental, Social and Governance (ESG) reporting obligations.
  • Focus of discussion shifted to cybersecurity in smart buildings given the continuous daily news about cyberattacks.

Monthly Reports (PDF)

The full reports with detailed analysis and systematization of the references can be downloaded below.

2020:   April       May       June       July       August       September       October       November       December      

2021:  January     February     March

References

The links to the subpages with systematized references are at the bottom of this page. The lists of references allow the reader "a deeper dive" into specific topics.

2020:  April       May       June       July       August       September       October       November       December     

2021:  January    February     March

Research Team

Lead Researcher: Natasa Mrazovic
Prinicipal Investigator: Martin Fischer
Website: Junwen Zheng, Marc Ramsey, Andrew Peterman
Comments or Questions: cife-aec-pandemic-research@stanford.edu