The $10 Billion Question: Is Construction Ready for New Tech?

April 30, 2018

Conley Smith, Sr. Business Writer

What started out as a faint buzz about the construction industry needing to digitize is now loudly reverberating from Silicon Valley all the way to Wall Street. Yes, that cha-ching sound you hear may be the billions—yes “b” as in billions—being invested in everything from user-friendly apps to virtual reality.

Specifically, $10 billion was invested in construction technology firms in the 2011- 2017 period, according to the McKinsey Global Institute. Much of this interest surrounds mobile and cloud-based collaboration platforms, online marketplaces for equipment and building materials, and solutions leveraging drones and AR/VR.

What’s fueling this investment? Many investors see a tremendous upside in a tech-savvy construction future. Projects would run much more effectively with user-friendly apps that enable real-time communication among crews using hand-held and mobile devices. They envision 5-D building-information-modelling (BIM)—3-D digital representation of a project overlaid with detail on scheduling and cost—working together with augmented- and virtual-reality technology to create a seamless workflow.

 

Contractors Slow to Adopt New Technology

One thing is clear, technology adoption in construction is lagging with more than half—- 54.4%—of companies saying they still do not have the budget to research new tech. Chalk it up to a lack of IT staff, budget, and management reluctance. In fact, the 2017 Construction Technology Report by JB Knowledge found that many contractors allocate only 1% of their annual sales volume to IT.

Other reasons? A critical skilled labor shortage along with an aging workforce is proving a drag on technology adoption as contractors struggle to eke out more than a 1% annual productivity gain. Ironically, slow productivity only proves the point that tech should play a bigger role—from the worksite to the office.

What’s holding back contractors? For many, the expense of adopting new tech outweighs its potential benefits. Others are just not ready to move out of their comfort zone. A 2016 KPMG survey found that only 8 percent of companies viewed themselves as “cutting-edge” while nearly 70 percent viewed themselves as “followers” or “behind the curve.”

Kick Start Your Digital Transformation

OK, here’s what we know. Growing project complexity and the high cost of construction are driving the industry to embrace technology in a big way. While some new technology may seem both far-fetched and expensive, many contractors are starting to realize the time and cost efficiencies are worth the investment in technology. For example, the need to share real-time project information between the office and the field is driving integration between project management and accounting ERP.

 

If anything, the steady drumbeat of investment in construction tech serves as a reminder that productivity-enhancing technologies can come in all shapes and sizes—from BIM to digital takeoff and estimating tools. For example, estimators and project managers are moving more and more from paper to digital to improve productivity and rely less on paper blueprints, designs, orders, and punch lists.
Ready to begin your digital transformation? Takeoff and estimating software is a great place to start to improve your bid accuracy and bid-to-win ratio. For contractors who already use these tools, On Center Software also offers Digital Production Control (DPC) so you can stay ahead of the curve to leverage a full estimating suite to track your productivity and protect your profits.

 

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