Nine Four Insights

Construction Technology: Current Stakeholder Priorities

Construction Technology: Current Stakeholder Priorities

Construction plays a critical part of the global economy. In the US alone, the industry represents trillions of dollars of annual spend and employs more than ten million people[1]. It’s massive, to say the least. Yet, the industry is consistently plagued by inefficiencies such as high costs and slow turnaround times. So, what caused the challenging construction environment we find ourselves in?

For starters, a major US labor shortage has played a key factor in cost inflation. When the Great Recession hit in 2008, and as real estate development essentially flatlined, 600k workers  left construction seeking employment in other parts of the economy and never returned[2]. More than a decade later, there are still more than 400k vacant construction jobs available. To make things worse, as baby boomers reach retirement age, early indications suggest the low Millennial replacement rate is unsustainable. This is significant because of the direct impact labor costs have on the cost structure of construction projects. Given 60-80% of costs associated with construction are already attributable to labor, and if the spread between labor supply and demand continues to widen, labor costs will potentially increase even further[3]. So, how do we bridge this chasm? Technology!

It’s well documented that the real estate industry, particularly construction, has been a laggard when it comes to tech adoption. There’s a variety of reasons, including, but not limited to, the fact that the industry is already low margin, hyper-local, baby boomer led, etc. Those reasons are what led to an initial reluctance to leverage technology and the continuous use of offline work environments. That resulted in unstructured, siloed data and slower communication cycles ultimately contributing to the lack of industry efficiency improvement.

However, it looks like we’ve hit a turning point with companies such as Autodesk, Procore, Plangrid (acquired by Autodesk), Fieldwire, Built Technologies and OpenSpace leading the way. Industry incumbents have finally realized the relative impact the right software systems have on their bottom lines far outweighs the initial investment required in time and cost. And now, with the onslaught of COVID-19, we only expect the gradual digital transformation that was occurring pre-COVID-19, to accelerate even faster. I’d like to be clear though, the technology that is being created and adopted across the ecosystem is not meant to automate jobs away from or replace humans. Its intention is for technology to augment human labor, reduce waste, eliminate rework, make the working environment safer, and automate administrative tasks that take time away from actually building – and that’s just scratching the surface.

Although the rate of tech adoption is increasing across the board, the new technologies that stakeholders are considering need to meet specific internal operational requirements. After speaking with multiple, international construction firms, we thought it was important to highlight some of the priorities of incumbent buyers here:

  • Platform: stakeholders prefer to work with single data repositories that operate as sources of truth rather than individual point solutions.
  • Interoperability: stakeholders believe it is imperative to connect with existing software so data can move/flow freely. For example, solutions are already in place to measure safety, quality and quantity. Even if the ability to measure is on a future product roadmap, customer prospects are impatient and expect it right now.
  • Automation: integrations with existing software to leverage intelligent data extraction are critical whereby preventing fieldworkers from having to manually input info themselves. Manual data entry adds more work, is generally seen as unproductive and is considered to be a frustrating experience for many stakeholders.

For founders reading this post, take this feedback with a grain of salt. It’s not the “end all be all”. Nine Four still recommends starting small and focusing on a specific pain point, at least initially, which could fly in the face of the “platform” and “interoperability” feedback above. That said, it’s important to keep these priorities and requirements in mind as you scale and think about product roadmap, development timeline and integrating with and complementing the existing construction software ecosystem.



[3] Anecdotes from large international construction firms.

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