Along with external variables, chronic labor shortages, and a rapidly changing technological environment, the construction industry is currently facing multiple challenges simultaneously. Let’s take a look together at how the Korean construction industry will find solutions and what changes it needs to prepare for amidst this complex crisis.

Middle East Risk: Will It End with a Simple Extension of the Construction Period?

The government’s recognition of the Middle East war as a force majeure is indeed a sigh of relief for construction companies. The surge in raw material prices and logistics disruptions had created immense pressure on construction costs. Especially when the supply of key materials like oil, asphalt, and rebar becomes unstable, it becomes really difficult to keep the sites running. This measure allows private construction sites to extend construction periods or adjust contract amounts, but it’s hard to believe this will solve all problems.

Honestly, the situation in the Middle East is not something that will be resolved in the short term. If it prolongs, simply extending the construction period won’t be enough. Construction companies are now burdened with the need to manage risks proactively and establish systems that can respond flexibly. So, what should the construction industry focus on in this situation?

• Key Contents of Force Majeure Recognition
  • Recognition of the Middle East war situation as a force majeure under the standard private construction contract
  • Opening up possibilities for construction period extensions and contract amount adjustments
• Future Challenges
  • Establishing fundamental countermeasures for long-term volatility in raw material prices
  • Strengthening risk management for overseas projects and diversifying supply chain strategies

AI Transforms Construction Sites: Becoming a ‘Data Company’

Watching the industry falter every time an external risk emerges, I realized that the ultimate answer lies in technological innovation. Especially these days, artificial intelligence (AI) is penetrating even the ‘last analog domain’ of the construction industry, shaking up the industry structure itself. As the entire process from design to construction, supervision, and maintenance is being reorganized based on data, the labor-intensive construction industry is rapidly transitioning into a ‘technology-intensive industry.’

Major domestic construction companies are already accelerating the adoption of AI. GS E&C defines physical AI as a core competitiveness, and Daewoo E&C is sharing its achievements in smart construction. Companies like POSCO E&C are even holding an ‘all-company AI challenge’ to change everything from report writing to working methods using AI. Now, construction companies are no longer just ‘companies that build buildings,’ but are transforming their identity into ‘data companies’ that accumulate and utilize data.

• Key Changes from AI Technology Adoption
  • Acceleration of digital transformation across all processes including design, construction, and operation
  • Transition from a labor-intensive industry to a technology-intensive industry
  • Reduction of serious accident risks through advanced safety and quality management
  • Successful cases of digitalizing procurement systems by ConTech startups like ‘Gongsaero’
• Expected Effects
  • Improved productivity and shortened construction periods
  • Transition to high-value-added businesses and risk reduction
  • Creation of new business models and expansion of sustainable growth possibilities

Chronic Labor Shortage: A Challenge to Be Solved with Technology and Culture

No matter how much technology advances, it’s ultimately people who run the sites. But as you all know, our construction industry is suffering from a severe labor shortage. The influx of young workers is decreasing, and skilled technical personnel are aging, leading to side effects like process delays and reduced productivity already appearing on site.

The number of students entering construction-related departments continues to decline, and the proportion of technical personnel in their 20s plummeted from 71% in 2014 to 45% in 2023. Conversely, the proportion of middle-aged and older workers (40s and above) significantly increased from 13% to 41%, showing how serious the aging problem is. To solve such structural labor issues, a long-term approach is needed rather than short-term remedies. Efforts to change the construction site culture itself, along with technology adoption, are desperately needed.

• Current Status of Construction Labor Shortage
  • Deepening shortage of skilled technical personnel and accelerating aging
  • Decreased influx of young people into construction sites
  • Approximately 190,000 construction workers left the industry in just four years compared to 2021
• Efforts for Solution
  • Maximizing labor efficiency through the adoption of smart construction technologies
  • Enhancing job attractiveness through construction culture improvement (diversity, fairness, inclusivity)
  • Expanding training programs for technical personnel in small and medium-sized enterprises and industry-academia-research cooperation

As always, the construction industry has persistently endured countless crises. I believe it will find solutions even amidst the current Middle East risks, chronic labor shortages, and the inevitable wave of digital transformation. What’s important is not just solving immediate problems, but rather adopting an attitude of improving the industry’s fundamental structure and preparing for the future from a long-term perspective.

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