Thursday, July 25, 2024

Transformative Shifts: Essential Changes Needed in India’s Construction Sector

Even though we have come a long way, it is believed that we are still not tapping into the full potential that construction sector has to offer

The construction sector plays a pivotal role in boosting the economy and is often termed as the backbone of a nation. We have seen economies fluctuate when the construction sector takes a hit and are witness to the sector’s contribution to India’s development. Even though we have come a long way, it is believed that we are still not tapping into the full potential that this sector has to offer.  

The construction sector in India is very fragmented, and with the number of stakeholders that are involved in a project, it can get really challenging to manage and execute a project to unmatched perfection and quality. Despite the odds, we have maintained quality, however, now looking at the quantum of development in the pipeline, it is the need of the hour to rapidly adopt better and more reliable methods to fast-track the construction pace while maintaining the best quality. 

As per the industry reports, by 2025 the Indian construction industry might reach close to a $1.4 trillion market. With a major boost in the residential sector, it is expected that 600 million people will be living in urban centers by 2030, thereby creating a demand for about 25 million residential units. To meet this demand, the finance minister announced the construction of two crore housing units to be constructed over the next five years and a new scheme aimed at rehabilitating the middle class living on rent in unauthorized chawls/slums. 

The government’s focus on affordable housing and its vision to boost investment will have a positive impact on the construction sector. Also, the capital expenditure allocation for FY 24-25 is being increased by 11.1% to INR 11.11 trillion, which is about 3.4% of the GDP and this is likely to boost the infrastructure investments in tier 2 and 3 cities.

Challenges in India

Non-adoption of mechanization: Due to the skepticism to adapt to mechanized measures, construction using modern technologies is often challenging. Contractors prefer to employ low-cost labour as compared to high-cost technology. Technology implementation on a small scale can still be managed with smaller machinery, equipment, cranes, etc., however, for large-scale construction, there are only a very few agencies who are capable of implementing this. Non-adoption of mechanization is also the reason for project delays and cost overruns in one way or another. 

As per the recent flash report published by MoSPI (Ministry of Statistics & Program Implementation) in June 2023, out of the total 1643 large-scale Central Government projects listed, a total of 815 projects are delayed w.r.t to their original schedule and with a collective cost overrun of 19.48% of original cost projection.

Hesitation in adopting new technology: The construction sector is also very hesitant to adopt new technologies, simply because there is a lack of knowledge and the risk of unknown challenges associated with them which can impact the project largely in terms of time, cost, and quality. Aiming to bridge this gap, we successfully delivered several projects for our clients using aluminum formwork systems, modular construction methods, and precast construction methods across India, that resulted in significantly optimizing time and cost. The future of the construction sector is going to be very interesting since technologies like Artificial Intelligence, wearable technology, and drone technology are going to shape the future in a better way. 


In India, we are starting to see some level of adoption in utilizing technologies like aluminum formwork and prefabricated structures but are lagging in the pre-cast construction segment. Prefabricated construction can assist us better in terms of time management, logistics flexibility, reduced wastage, quality control, reduced dependency on unskilled labor, and cost optimization, however, the adoption and implementation are taking time. 

As per reports by industry experts, it is said that the precast construction market in Indian real estate has a share of about 2-3% as of 2022, which is negligible when compared to conventional construction methods. Aluminum formwork systems are majorly being adopted; however, they have their limitations regarding the number of repetitions and usability in modular construction only. Many developers are now investing resources to setup the infrastructure to adopt precast construction technology which can be designed as per the structural requirements. There are many government agencies and institutes that are now adopting and promoting precast construction for faster completion of targets. 

Lately, we are also seeing the increased use of wearable technology and AI as a predictive model in the construction sector to improve execution planning, documentation, and efficient communication. In Colliers, we are using our in-house AI platform “CoGence”, which assists us in automating processes in construction management. The construction sector is also witnessing the extensive use of drone technology for better visibility of construction sites for various activities, such as building surveys, site inspections, project progress monitoring, promotional photography, etc.

Things will certainly improve over the next decade, so it is time to explore the full potential of the real estate and construction sector. 


Related Articles

Latest Articles