Will Construction Tech Budgets Break Through in 2019?

January 17, 2019 Conley Smith

With the ringing in of the new year has come lots of excitement around hot construction technology trends. Experts are predicting that everything from AR to wearables to robotics will make big waves in 2019.

But if IT budgets in 2017 and 2018 are any indication, it is unclear whether 2019 will be the year contractors stop resisting and start investing additional staff and money on new technologies. Even as cutting-edge tech is turning heads daily with promises of greater productivity and profitability, contractors are still proving slow to jump on the bandwagon, according to the new 2018 JBKnowledge Construction Technology Report.

Survey Says: Budgets and Staff Remain Tight

As was the case in 2017, the majority (46%) of survey ConTech respondents in 2018 reported investing less than 1% of their annual sales volume on IT. It should be noted that the number of respondents from smaller companies (building less than $1 million annually) doubled from last year’s survey. However, as with previous years, the largest number of participants worked for firms with annual sales volume between $21 million to over $500 million.

What does it all mean? Companies included in the survey spent nearly the same percentage of revenue on technology in 2018 as they did in 2017. This is a bit alarming when you consider that experts like Gartner predicted an increase of 6.2% in global IT spending. Plus, there has been so much noise around construction being dead last in both productivity and IT investment when compared to other industries.

Here are a few of the more interesting survey facts on how firms planned and budgeted for technology in 2018:

Who’s Driving the IT Bus?

  • 48.5% reported having a dedicated IT department
  • 20.7% reported outsourcing a portion of their IT
  • 22.7% reported having staff members with IT responsibilities, but not a dedicated department
  • 19.7% reported outsourcing all IT
  • 40.2%—a 5% jump over 2017—increased their IT staff in 2018
  • More than 60% reported transparency in their company’s technology budgeting process

While the survey did show a trend in more companies moving toward hiring dedicated Construction Technologists, it seemed at odds with the limited budget and scope. For most construction firms, CFOs and CEOs are still in charge of IT departments with only larger firms reporting IT leadership falling under CIOs, CTOs, and the new Chief Data Officer role.

Interestingly, the size of IT departments is the one trend that has been consistent since JBKnowledge began the report in 2012. The majority (65%) of those surveyed reported having small IT departments of one to five dedicated employees. Participants noted a mixed bag of tech support with staffs stretched thin and more reliance on outsourcing. In addition, nearly half reported using indirect billing so it does appear contractors are getting creative when it comes to billing for IT expenses. The good news is tech is being billed as a revenue generator, not a cost center.

Pressure Building for Higher IT Budgets

One thing is clear: Technology can deliver projects faster, cheaper, and more efficiently. For 2019, many experts see automation spreading from one job site to the next. With the skilled labor shortage continuing to be a drag on productivity, contractors of all trades may finally be ready to loosen the IT purse strings. For example, some see technology as the key to reducing the amount of time workers have to be on-site as more construction companies use off-site fabrication, drones, robots, or GPS-guided machinery to reduce the amount of work done by crews.

JBKnowledge notes that instead of being paralyzed by the overwhelming number of tech solutions, contractors may begin to build on the tech they already use on a daily basis. As firms start to realize the benefits of integrated technology, you may finally begin to see higher IT budgets and more tech disruption in 2019.

Contractors who embrace powerful end-to-end construction management tools are already realizing major gains in speed, accuracy, and efficiency. Are you ready to learn more? Find out how you can boost your profits when you download On Center’s free Contractor’s Suite White Paper for step-by-step advice.

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