Construction is responsible for a wide range of impressive accomplishments, from stunning cityscapes and foundational infrastructure on a massive scale to sustained innovation. However, in the past couple of decades, it also has been plagued by dismal performance.

Annual productivity growth over the past 20 years was only a third of total economy averages. Risk aversion and fragmentation as well as difficulties in attracting digital talent slow down innovation. Digitalization is lower than in nearly any other industry. Profitability is low, at around 5 percent EBIT margin, despite high risks and many insolvencies. Customer satisfaction is hampered by regular time and budget overruns and lengthy claims procedures.

The industry will feel the economic impact of the COVID-19 strongly, as will the wider construction ecosystem—which includes construction companies’ component and basic-materials suppliers, developers and owners, distributors, and machinery and software providers. At the time of writing, high levels of economic uncertainty prevail worldwide, and the construction industry tends to be significantly more volatile than the overall economy. MGI scenarios suggest that if things go well, construction activity could be back to pre-crisis levels by early 2021. But longer-term lockdowns could mean that it takes until 2024 or even later. In the past, crises have had an accelerative effect on trends, and this crisis is also expected to trigger lasting change impacting the use of the built environment, like online channel usage or remote-working practices.