2016 Construction Industry Outlook

According to McGraw Hill Construction’s venerable 2016 Dodge Construction Outlook, things are looking up within several sectors of the construction industry. (McGraw Hill Construction provides data, news, insights, research and intelligence to help construction professionals make better-informed decisions and strengthen their market position.)

Experts predict that that total new construction starts in the U.S. will rise 6 percent in 2016 to an estimated $712 billion following gains of 9 percent in 2014 and an estimated 13% in 2015. According to Robert Murray, who is Chief Economist for Dodge Data & Analytics, the expansion for the construction industry has been underway for several years with varying contributions from each of the major sectors. The 2016 pattern is as follows:

  • Single-family housing is expected to grow 20 percent in dollars, corresponding to a 17 percent increase in units to 805,000.
  • Multifamily housing will rise 7 percent in dollars and 9 percent in units.
  • Commercial building will increase 11 percent, up from the 4 percent gain estimated for 2015.
  • Institutional building will advance by 9 percent, after a 6 percent rise in 2015.
  • Public works construction will be flat with its 2015 amount.
  • Manufacturing plant construction will recede an additional 1% in dollar terms following the steep 28 percent plunge in 2015 that reflected the pullback by large petrochemical plant starts.

 

Construction Defects

The term “construction defect” is a general one that refers to a deficiency in the design or construction of a building or other structure, or one that wasn’t constructed in accordance with plans, specifications or within acceptable standards of workmanship in the construction industry. But, it also can be work that simply falls short of a construction project stakeholder’s expectations.

Construction defects arise in a number of ways. And, they may be visible or remain hidden deep within layers of work. Some are serious and have the potential to manifest themselves as serious structural failures with the potential to cause physical injury or property damage. Most don’t present such risks, but they often cause financial harm.

 

What Causes Construction Defects?

There are many potential causes for construction defects. Here are just a few:

  • A design that isn’t prepared in accordance with applicable building codes.
  • Failure to execute work in accordance with plans and specs.
  • Failure to execute work in accordance with acceptable industry standards of workmanship.
  • Improper installation of materials, equipment or systems.
  • Improper storage of construction materials prior to installation.
  • Use of non-conforming or lesser quality materials than is specified for the build.
  • Specification and use of new construction materials and systems that haven’t been tested over a period of time.
  • Increased scheduling pressures that demand contractors complete work within significantly shorter timeframes than the norm.

 

How Many Kinds of Construction Defects Are There?

There are five basic kinds or categories of construction defects. They are:

  1. Site defects
  2. Building envelope defects
  3. Structural defects
  4. HVAC defects
  5. Electrical and plumbing defects

Within each of the five aforementioned categories of construction defects, there are two types: Latent and Patent.

Latent defects are concealed and are not often obvious or readily observable upon inspection. These defects generally appear after the passage of time, often resulting in warranty claims or disputes down the road. Patent defects are visible and would be obvious upon inspection.

 

The Consequences of Construction Defects

The bottom line is no defect is a good defect. At the very least, if a construction defect goes unnoticed too far into the life cycle of a construction project, it will increase construction costs, which in turn threaten the reputations and profitability of all parties involved. A worse case scenario would be that lenders or investors lose confidence and insurance costs soar – especially if the defect is allowed to continue unresolved.

 

How Can Construction Defects Be Prevented?

There are a number of ways. Here are a few:

  • Preventative measures should be implemented throughout the construction life cycle to include comprehensive QA and QC programs supported by photo documentation.
  • “Conformance verification” should replace “non-conformance detection” as a best practice during the course of construction; supported by photo documentation.
  • Construction details should regularly be compared to as-built conditions on a project in order to isolate the cause of a defect and possibly suggest a simple repair using photo documentation as an analysis tool.