Civil Engineering Market Report 2021

The Civil Engineering sector has experienced a decade like never before. With investment ramping up, new technologies launched, globalisation increasing and new markets emerging, the industry was full speed ahead before the Covid-19 pandemic hit.

Below VHR’s Civil Engineering recruitment specialists reveal the latest market challenges, trends and predictions for the coming decade.

10-Year Global Civil Engineering Outlook

1. Market Size and Share

Despite the difficulties of the pandemic, the global Civil Engineering market size was valued at $7.74 trillion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 5.7% from 2021 to 2028. Construction services led the market and accounted for more than a 27% share of the sector’s global revenue in 2020. The market share was maintained through increasing demand for high quality, sustainable transport projects to tackle growing populations and the traffic and pollution challenges this creates.

Emerging economies and expanding populations around the world will require rapid enhancements to roads, railways, buildings and power supplies to meet increasing need. Increasing consumer disposable income amongst the emerging middle classes in several growing economies will drive real estate and housing market booms for the next decade. Increasing urban populations in Asia Pacific will drive industrial manufacturing demand and residential property demand in China, India and South Korea until 2028.

Climate change targets enforced by the European Union and United Nations will drive investment in green bonds and environmentally friendly construction and infrastructure projects. Planning and design services are projected to see the fastest CAGR of the sector in the next seven years, due to increasing prioritisation of integration of design and construction processes.

2. Impact of Covid-19 in the Short-Term and in the Future

The immediate impacts of the coronavirus pandemic were similar to many other industries: project cancellations, supply chain delays and inefficiencies resulting from lockdown and social distancing measures. Deferral of investment plans is set to continue in the short-term – PwC’s latest survey found that 81% of Chief Financial Officers across industries are considering cost reductions in response to the crisis, with 60% planning to defer or cancel investments in areas such as facilities, operations, technology and equipment. Construction start-ups and SMEs have been and will be particularly vulnerable to bankruptcy due to the standard lack of capital reserves. Financial stability will remain the priority for most construction and civil businesses in the next three years, with innovation temporarily shelved in favour of close budget balancing and customer retention.

Ways of working must be adapted and workers must upskill to incorporate new technology into Engineering processes and effectively manage teams who cannot occupy the same physical space. ‘Working remotely with good digital infrastructure might be easy for designers, consultants, educators and students but more difficult for large construction site workers and network maintenance operators,’ says Bachar Hakim, Head of Pavement Design and Asset Management & Transportation at AECOM. ‘The first priority is to improve the digital infrastructure and communication skills, followed by offsite construction and automation.’

3. Smarter Cities

Homeworking is set to remain popular with workers across industries who have enjoyed a lack of commute, increased productivity and more time to focus on family and home life. The majority of office-based work is set to shift to a hybrid model, involving a balance between professional buildings and working from home. One in four businesses had already cut office space by November last year. FTSE Financial Services companies are first in line, with insurance giant Aviva announcing in March 2021 that it would cut office space by 30% this year, and HSBC, Standard Chartered, Lloyds Bank and Metro Bank have all announced plans to dramatically reduce office space before 2025.

Large cities like London are predicted to transform in the next decade: skyscrapers are set to become increasingly redundant, with the look, feel and function of all working spaces redesigned to reflect the evolving needs of their inhabitants. Post-pandemic workplaces will focus more on providing a positive environment that feeds a company culture of hybrid workers from all backgrounds, that inspires creativity and facilitates real teamwork. Physical workspaces will no longer resemble the office blocks of the past, but will be more complex to design, build and maintain, with breakout rooms, gathering spots, rest and hygiene areas and training facilities.

The reduced demand for office space will enable bigger cities to develop more residential spaces. Town and city centres will become multicultural hubs for both living and working, with more green areas, space for families and exercise, and entertainment and shopping facilities. Civil Engineering and Infrastructure companies will see their products and services rapidly evolving to meet the changing needs of communities and industries.

4. Shift to Contract Workforce

In recent years, the news of the impending IR35 legislation changes has caused much debate on whether temporary labour will be consigned to history. The introduction of IR35 off-payroll laws into the private sector will require all UK businesses employing contractors, freelancers or interim staff to increase investment in legal administration and ramp up focus on workforce compliance rather than risk £millions in fines. Whilst the additional admin and resource burdens will negatively impact both employer and contractor, IR35 will not see the end of temporary labour – and contracting will in fact continue to grow, particularly in Civil Engineering and Infrastructure.

Engineering contractors present the perfect solution for businesses that have recently made redundancies and are cautious about committing to long-term workforce investments. Engineering and Infrastructure providers will be more in demand than ever before as communities reopen and telecommuting becomes part of the new normal, leading to urgent prioritisation of cybersecurity measures, safe transport and connectivity across sites and locations. These businesses will be operating with smaller budgets but will still require the same levels of expertise to deliver vital projects on time and in full. Flexible, highly skilled contract workers will be increasingly drafted in at short notice on short contracts to deliver to project deadlines, before moving on to the next assignment.

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