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Cutting Through the Chaos of Peak Disruption

Posted: September 25, 2018

Conley Smith, Sr. Business Writer

Today’s construction industry is facing a wave of new technology that may – at times – feel more like a tsunami. With Silicon Valley pouring billions into artificial intelligence, virtual reality, and robotics, many contractors are struggling to make sense of the storm forecast.

Whether you’re a walls and ceilings contractor in the market for straight-forward estimating software or a GC trying to understand sophisticated building modeling and materials, it can be tough differentiating what is needed in this flood of new tech. Even as investment and interest in new construction technology are peaking, many contractors are resisting the pressure to change how they do business. As a result, sticking with what you know, like estimating with colored pencils and paper, can be a lot like sticking your head in the sand.

Peak Disruption is Coming Like a Hurricane

Pressure is mounting for the construction industry to move away from manual and toward digital. The much-cited 2017 McKinsey & Co. report declared construction as being the second-least digitized sector. If construction productivity were to catch up with the total economy, it could boost the sector’s value by an estimated $1.6 trillion or about 2% of the global economy. Many in the industry are sounding the alarm that there is way too much at stake financially to ignore these technological advances.

There is a lot of buzz about the construction industry reaching “peak disruption” as $1 billion in venture capital has poured into the construction tech space in the first half of 2018 alone. With more than 2,000 construction technology startups crowding the marketplace, the challenge is all about aligning business needs with what is available in the market. By comparison in 2011, there were only one or two apps on the market for construction. Today’s startups are tackling everything from robotic arms to 3D printers.

Just what is “peak disruption?” FMI Corp. explains it “as more of a hurricane than a tornado.” They say it is destructive and disruptive, but the industry will likely have enough time to prepare and respond over a three-to-five-year cycle. But because of these productivity and efficiency gaps, the construction industry is now under more intense scrutiny to act on innovation and add new ways of working.

Struggling to Adapt and Adopt New Tech

So, are contractors breaking away from their typical conservative approach or will they get blown away by industry disruption? The recent AGC/FMI Risk Study showed that many are just innovating around the edges or in a piecemeal fashion. For example, the limited adoption of BIM for no more than clash detection is one way the industry is struggling to adapt.

In fact, the Risk Study cites a KPMG study of 200 senior construction executives that found that even while projects are becoming bigger and bolder—with greater risk—only 8% of the companies ranked themselves as ‘cutting-edge technology visionaries,’ while 64% of contractors and 73% of project owners rank as ‘industry followers’ or ‘behind the curve,’ when it comes to technology.

They also note that less than 20% of respondents said they are aggressively disrupting their business models—even though innovations like remote monitoring, automation and visualization have enormous potential to speed up project delivery, reduce costs, and improve safety.

Those surveyed by AGC/FMI cited going paperless, transitioning to virtual design and construction (VDC), standardizing processes, using tablets in the field, and dabbling in prefabrication methods as innovations they are already adopting. However, very few respondents reported truly transforming their business model.

The real problem comes when contractors and firms have a knee-jerk reaction—thinking any old device or software program will transform their business. Instead, they end up only adding to the chaos—especially if new platforms and tools don’t live up to expectations and wind up on a shelf.

Taking a Proactive Approach When Adding Tech Tools

For those adding new technology, the benefits are proving well worth the investment. For starters, contractors find new tech tools can omit duplication of effort, minimize errors, and help with quicker communication between the field and the office. All of this adds up to a more productive and profitable bottom-line.

How to begin the process when adding new tools? The AGC/FMI Risk Survey urged construction firms take a systematic step-by-step approach when evaluating technology. These steps include:

1. Make sure your company has a technology strategy and any new initiative aligns with it.

2. Create a business use case exploring the business need and specifics it will address

3. Define how big the problem is and how the solution will scale to solve it.

4. Review your company’s culture and how employees will respond to technology and whether they are suffering from innovation fatigue.

5. Weigh how a new technology impacts, integrates or enhances the company’s current technology stack.

Take a deeper dive into how integrated estimating tools can help you bid more jobs more accurately and respond more quickly to changes. Download our white paper, Step Outside Your Comfort Zone: Digital Tech Holds the Promise of Boosting Construction Productivity, now.

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