BUILDING CODE COMPLIANCE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

The building code compliance Market size was valued at US$ 8.16 Bn in 2023 and is expected to reach US$ 14.73 Bn by 2030, growing at a compound annual growth rate (CAGR) of 8.8% from 2023 to 2030.

Building Code Compliance Market Regional Insights:

• North America is the largest market for building code compliance, accounting for over 40% of the global market share in 2023. The region is home to some of the leading players in the market, such as IBM is an American multinational technology corporation, Oracle is a multinational computer technology company, and SAP SE is a multinational software company. The market growth in North America is due to the stringent building codes in the region and the increasing adoption of digital technologies to improve compliance.
• Europe is the second-largest market for building code compliance, accounting for over 30% of the global market share in 2023. The market growth in Europe is due to the growing demand for sustainable buildings and the increasing complexity of building codes in the region.
• Asia Pacific is the fastest-growing market for building code compliance, with a CAGR of over 14% during the forecast period. The market growth in Asia Pacific is due to the rapid urbanization and the growing construction industry in the region.

Figure 1. Building Code Compliance Market Share (%), By Region, 2023

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Building Code Compliance Market: Analyst’s Viewpoint

The building code compliance market is expected to grow steadily driven by the increasing need for adherence to safety and environmental regulations during construction. Strict enforcement of building codes across major global economies including the U.S., China, and European Union (EU) nations will drive significant demand for code compliance services. Further, reconstruction activities post natural calamities will require thorough code inspections and certifications.

However, lack of awareness about the latest code updates and differences in regulations across jurisdictions may impede the full realization of compliance requirements. Complex approval processes also restrict the market's growth potential. To overcome these barriers, market players could focus on regular training and educational programs for builders and contractors.

Automation of permit and inspection workflows by using technologies like artificial intelligence (AI) and internet-of-things (IoT) also present opportunities to make compliance simpler, faster and more affordable.

North America dominates the market due to well-established code mandates and higher construction expenditure in countries like the U.S. However, the Asia Pacific region is expected to be the fastest growing with ongoing infrastructure development drives in China and India coupled with improving regulatory frameworks. Overall, with greater emphasis on public safety and green building initiatives worldwide, the demand for building code compliance services is expected to steadily rise across both developed and emerging nations in the near futurew.

Building Code Compliance Market Drivers:

• Government regulations and stringent building codes: Government regulations and stringent building codes are major drivers for the building code compliance market. Governments worldwide are implementing and expanding building codes to ensure safety, sustainability, accessibility and resilience of buildings. For instance, the International Code Council has adopted the 2021 building codes in the U.S., introducing new energy efficiency requirements. Such regulations are creating strong demand for compliance services. Moreover, authorities are conducting rigorous inspections and levying harsh penalties for non-compliance, thus compelling stakeholders to actively seek compliance services.
• Increasing investments in construction projects: Rising number of construction activities globally is driving demand for building code compliance services. Developing nations are expected to account for over half of the market. With large-scale investments in real estate, infrastructure and energy projects, ensuring code compliance is critical. Construction companies are utilizing compliance services to avoid costly reworks, delays and lawsuits.
• Rising adoption of building information modeling (BIM): Growing adoption of BIM in architecture, engineering and construction industries is propelling the demand for building code compliance solutions. BIM enables stakeholders to integrate code requirements early in the design stage, conduct automated model checks and perform code validation through the building lifecycle. Several companies offer BIM-based compliance solutions to capitalize on this trend. For instance, Autodesk Construction Cloud connects teams and project data from design to done reducing risk, protecting profits, and increasing predictability,  provides tools for clash detection, digital plan reviews and assessing BIM models for code violations.
• Focus on s ustainable and green buildings: Rising trend of sustainable and green buildings to reduce environmental impact is also spurring the need for compliance services. Green buildings have to adhere to stringent codes and rating systems such as LEED and BREEAM. Companies are offering specialized compliance solutions to help contractors and owners construct sustainable buildings and obtain certifications. These solutions ensure energy efficiency, water conservation, material sustainability and other parameters.

Building Code Compliance Market Opportunities:

• Integration of emerging echnologies: There are significant opportunities for leveraging emerging technologies like (internet-of-things) IoT, big data, artificial intelligence (AI) and machine learning to enhance building code compliance processes. Drones equipped with cameras and thermal sensors can provide a bird's eye view of hard to reach areas and spots not visible from ground level. This allows inspectors to identify potential issues quickly. Computer vision algorithms can then analyze these images almost instantly and flag anomalies for closer examination. When integrated with building information modeling (BIM) models created during design, drones can even detect deviations from plans and catch issues early. For instance, in December 2021, the International Code Council is initiating the "Code on a Mission" challenge with the aim of having more than one-third of the U.S. population adhering to energy codes, derived from the 2021 IECC (International Exhibition-cum-Convention Centre) by the conclusion of 2023.
• New software-as-a-service business models: The transition from legacy on-premise compliance software to cloud-based software-as-a-service (SaaS) solutions provides new opportunities. SAAS models enable easy scalability, faster deployment, and mobile access to compliance tools. Several companies provide subscription-based compliance software with continual upgrades and support services. The scalability of cloud computing and SaaS enables expanding to new markets and reaching small and medium enterprises (SMEs) cost-effectively.
• Growth in modular and prefabricated construction: Growing use of modular and prefabricated construction presents an opportunity for compliance solutions. As modules are built offsite under controlled conditions, there is increased emphasis on design and process compliance before assembly. Prefab and modular construction companies partner with compliance providers early on to integrate protocols throughout the supply chain. Customized solutions can enhance quality control and minimize delays.

• Public private partnerships (PPP): Public private partnerships offer an avenue to develop advanced compliance capabilities and infrastructure, especially in developing nations. PPP models can help upgrade existing labs, testing facilities, and training programs through synergies between companies and governments. For instance, In November 2023, the collaboration between TÜV Rheinland, renowned for its independent inspection and testing expertise, and Texbase, which specializes in software for material innovation and compliance, was established. This strategic alliance enables brands and retailers to leverage Texbase's comprehensive data management systems, enhancing the efficiency of crucial processes that influence the quality control and advancement of product design and manufacture.

Building Code Compliance Market Trends:

• Growing adoption of smart cities and connected infrastructure: The exponential growth of smart cities globally has created the need for solutions to ensure smart buildings and infrastructure complies with safety, connectivity and data standards. Technology companies are collaborating with smart city developers to implement compliance solutions tailored for connected systems and IoT sensors. For instance, According to the World Population Prospects 2022 report released on World Population Day, it is anticipated that the global population will hit the 8 billion mark on November 15, 2022. Furthermore, projections indicate that in 2023, India is expected to overtake China as the world's most populous nation.

• Rise in outsourcing of compliance services: Construction companies are increasingly outsourcing compliance services to accredited third-party providers to reduce costs and minimize risks. Outsourcing enables focusing on core construction activities while experts handle code consulting, inspections, certifications, and document management. Large compliance firms are offering bundled packages with comprehensive auditing, testing, and reporting capabilities for one-stop solutions.
• Integration with BIM and project management software: Compliance solutions are being integrated with BIM and construction project management software for streamlined workflows. This enables automating code checking directly within the tools used for design modeling and construction coordination. For instance, Autodesk is a multinational software corporation that makes software products and services for the architecture, engineering, construction, manufacturing, media, education, and entertainment industries and Solibri is recognized as the market leader in Model Checking Software operating in Building Information Modeling (BIM), solutions allow users to run code checks within Revit BIM software. Such integrations provide a holistic view of compliance needs.
• Use of drones for inspection and surveying: Drones are being increasingly used in the compliance process for building inspection and construction site surveys to boost speed and safety. Specialized drone-mounted cameras allow capturing high-resolution aerial images and videos of structures and components for assessment by compliance officers. Drones can survey hazardous or difficult to reach areas more efficiently. This enables faster verification of code deviations.

Building Code Compliance Market Restraints:

• Lack of harmonization between different regional and local codes: There exists inconsistency and complex variation between building codes and standards across different states, cities and municipalities within a country. Navigating this complexity poses challenges in establishing uniform compliance protocols. Companies have to customize region-specific compliance solutions leading to increased costs. Lack of harmonization also results in construction delays. On the other side, advancements in digital technologies, such as building information modeling (BIM) and standardized compliance software, offer solutions that help companies navigate regional differences more efficiently. Collaborative initiatives between stakeholders, including policymakers, industry experts, and construction professionals, further facilitate dialogue and knowledge sharing, thus paving the way for more unified approaches to building regulations.
• Counterbalance: By leveraging these resources and fostering collaboration, the construction industry can mitigate challenges that are associated with varied codes, enhance efficiency, and promote a more standardized approach to compliance without compromising safety or quality.
• High upfront costs of compliance software and training: Though critical, investment in compliance software and training inspectors involves significant upfront costs for construction companies. Adoption is lower in small and midsized contractors. The complexities of operating specialized software also necessitate expenditure on training employees, thereby further adding to costs. This poses a restrain, especially in emerging economies with fragmented construction sectors.
• Counter Balance: Advancements in technology are leading to more user-friendly software solutions tailored to meet the diverse needs and capacities of small to mid-sized contractors. By prioritizing employee training and skill development, companies can foster a culture of continuous improvement, empowering their workforce to adapt to evolving regulatory landscapes and industry standards.
• Resistance to adoption of compliance solutions in low regulated markets: There is slower uptake of modern building code compliance solutions in regions with lower regulations and enforcement. The absence of stringent penalties for non-compliance reduces the incentive to proactively invest in compliance capabilities. There is also lack of awareness regarding benefits of compliance. Resistance to change legacy practices in such markets is a major hurdle.
• Counter Balance: as communities and investors become more informed about the long-term benefits of adhering to modern building codes, there's a growing momentum for change. Collaborative efforts between industry leaders, policymakers, and educational institutions can further drive awareness, facilitate knowledge sharing, and catalyze the adoption of best practices. Therefore, while challenges persist, the shifting landscape and increasing recognition of the value proposition that are associated with compliance are gradually reshaping attitudes and fostering a more proactive approach to building standards in these regions.

Recent Developments:

New product launches:

• In May 2023, UpCodes is a comprehensive code compliance platform, introduced "Copilot," an AI-powered tool that is designed to simplify the complexities of building codes. Utilizing ChatGPT-4 technology, Copilot functions as a research aide, thereby addressing intricate code inquiries and enhancing responses with direct links to pertinent code sections.
• In March 2021, UpCodes, a startup specializing in building-code compliance solutions, revealed that it secured US$3.36 million in pre-Series A financing, thus bringing its cumulative fundraising to US$4.15 million. The primary investment in this round came from Point Nine Capital, a Germany based  firm renowned for its investments in SaaS and online marketplace ventures.

Acquisition and partnerships:

• In October 2023, Ketchum city officials announced plans to collaborate with an external entity for inspections and various building department tasks. This decision comes in response to shifts in the Idaho Division of Building Safety's approach to enforcing specific local building codes and concerns regarding the work performed by the state agency.
• In January 2022, Bureau Veritas, a global frontrunner in testing, inspection, and certification, reveals its acquisition of PreScience. This U.S.-based firm is renowned for its excellence in Project Management and Construction Management services, particularly in transportation infrastructure projects, including highways, bridges, and rail/transit. This helped expand Bureau Veritas’ construction project management expertise.

Figure 2. Building Code Compliance Market Share (%), By Service Type, 2023

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Top Companies in Building Code Compliance Market:

• Intertek
• SGS
• Bureau Veritas
• DEKRA
• TUV Rheinland
• TUV SUD
• Element Materials Technology
• Applus+
• UL Solutions
• NSF International
• MISTRAS
• Building Control Alliance
• SOCOTEC
• QPS
• Acme Analytical Laboratories
• ALS
• Eurofins Scientific
• EnviroScience
• EAG Laboratories
• Engineering Systems

Definition: Building code compliance refers to the process of ensuring that the design, construction, operation, and maintenance of buildings and structures conform to the codes, standards and regulations set by governmental agencies at the federal, state and local levels. Compliance helps ensure the safety, sustainability, accessibility, energy efficiency and resilience of the built environment. Code compliance services involve reviewing plans, performing inspections and tests, certifying systems, and providing consulting to assist stakeholders in adhering to building codes and standards. The market comprises testing, inspection, certification, consulting, and software solutions offered by companies that assess compliance. Adherence to building codes is critical for risk mitigation and to create hazard-resistant, high-performance buildings and infrastructure.

Building code compliance refers to the process of ensuring that the design, construction, and operation of buildings and structures adhere to the codes and standards set by governmental agencies. Compliance is critical for ensuring the safety, sustainability, accessibility, and energy efficiency of buildings. The market is driven by increasing construction activities globally, government regulations mandating compliance, and focus on improving building performance.

The building code compliance market is segmented into service type, end user, and sourcing type, and region. By service type, the market is segmented into testing & inspection, certification, project management, consulting, and others. The testing & inspection segment accounted for the largest share in 2022. Testing and inspection services are crucial for verifying code compliance during various stages of construction. The demand for testing and inspection is increasing due to stringent regulations and building owners prioritizing safety and performance.